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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Mizuho Financial Group Inc. (NYSE:MFG) changed recently.
Hedge fund interest in Mizuho Financial Group Inc. (NYSE:MFG) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that MFG isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare MFG to other stocks including Carrier Global Corporation (NYSE:CARR), Canadian Natural Resources Limited (NYSE:CNQ), and Match Group, Inc. (NASDAQ:MTCH) to get a better sense of its popularity.
In the 21st century investor’s toolkit there are numerous indicators stock market investors have at their disposal to analyze stocks. Two of the most under-the-radar indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outpace the broader indices by a very impressive amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we're going to review the key hedge fund action regarding Mizuho Financial Group Inc. (NYSE:MFG).
Do Hedge Funds Think MFG Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MFG over the last 23 quarters. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Mizuho Financial Group Inc. (NYSE:MFG), which was worth $12 million at the end of the fourth quarter. On the second spot was Te Ahumairangi Investment Management which amassed $2.6 million worth of shares. D E Shaw, Citadel Investment Group, and Schonfeld Strategic Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Te Ahumairangi Investment Management allocated the biggest weight to Mizuho Financial Group Inc. (NYSE:MFG), around 0.33% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to MFG.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Arrowstreet Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Schonfeld Strategic Advisors).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Mizuho Financial Group Inc. (NYSE:MFG) but similarly valued. These stocks are Carrier Global Corporation (NYSE:CARR), Canadian Natural Resources Limited (NYSE:CNQ), Match Group, Inc. (NASDAQ:MTCH), Southwest Airlines Co. (NYSE:LUV), Prudential Financial Inc (NYSE:PRU), Roblox Corporation (NYSE:RBLX), and Cintas Corporation (NASDAQ:CTAS). This group of stocks' market valuations match MFG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CARR,51,2166831,-1 CNQ,29,528873,0 MTCH,68,2938465,-4 LUV,52,747041,-3 PRU,37,634521,1 RBLX,46,3387779,46 CTAS,32,582628,-4 Average,45,1569448,5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 45 hedge funds with bullish positions and the average amount invested in these stocks was $1569 million. That figure was $16 million in MFG's case. Match Group, Inc. (NASDAQ:MTCH) is the most popular stock in this table. On the other hand Canadian Natural Resources Limited (NYSE:CNQ) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Mizuho Financial Group Inc. (NYSE:MFG) is even less popular than CNQ. Our overall hedge fund sentiment score for MFG is 23.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards MFG. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th but managed to beat the market again by 6.1 percentage points. Unfortunately MFG wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); MFG investors were disappointed as the stock returned 0% since the end of the first quarter (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.