Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Mitcham Industries, Inc. (NASDAQ:MIND).
Mitcham Industries, Inc. (NASDAQ:MIND) shareholders have witnessed an increase in enthusiasm from smart money lately. MIND was in 4 hedge funds' portfolios at the end of the third quarter of 2019. There were 3 hedge funds in our database with MIND holdings at the end of the previous quarter. Our calculations also showed that MIND isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now let's take a glance at the key hedge fund action surrounding Mitcham Industries, Inc. (NASDAQ:MIND).
How have hedgies been trading Mitcham Industries, Inc. (NASDAQ:MIND)?
At Q3's end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards MIND over the last 17 quarters. With hedge funds' capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, John W. Rogers's Ariel Investments has the most valuable position in Mitcham Industries, Inc. (NASDAQ:MIND), worth close to $9.2 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, holding a $1.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism encompass Matthew Hulsizer's PEAK6 Capital Management, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Ariel Investments allocated the biggest weight to Mitcham Industries, Inc. (NASDAQ:MIND), around 0.12% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.001 percent of its 13F equity portfolio to MIND.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, assembled the most valuable position in Mitcham Industries, Inc. (NASDAQ:MIND). Citadel Investment Group had $0 million invested in the company at the end of the quarter.
Let's now review hedge fund activity in other stocks similar to Mitcham Industries, Inc. (NASDAQ:MIND). These stocks are Innovate Biopharmaceuticals, Inc. (NASDAQ:INNT), Retractable Technologies, Inc. (NYSE:RVP), Bioanalytical Systems, Inc. (NASDAQ:BASI), and United States Antimony Corporation (NYSE:UAMY). This group of stocks' market valuations are similar to MIND's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INNT,1,1336,-1 RVP,1,990,-1 BASI,1,1201,0 UAMY,2,52,1 Average,1.25,895,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.25 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $10 million in MIND's case. United States Antimony Corporation (NYSE:UAMY) is the most popular stock in this table. On the other hand Innovate Biopharmaceuticals, Inc. (NASDAQ:INNT) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Mitcham Industries, Inc. (NASDAQ:MIND) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MIND wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MIND were disappointed as the stock returned -33.2% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.