Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors' favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the second quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds' top consensus picks. This year hedge funds' top 20 stock picks outperformed the S&P 500 Index by 6.6 percentage points through May 30th. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
In the financial world there are plenty of gauges market participants have at their disposal to evaluate publicly traded companies. Some of the most useful gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite investment managers can outperform the broader indices by a superb margin (see the details here).
Let's go over the fresh hedge fund action surrounding Six Flags Entertainment Corp (NYSE:SIX).
How are hedge funds trading Six Flags Entertainment Corp (NYSE:SIX)?
Heading into the second quarter of 2019, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 30% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SIX over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, H Partners Management held the most valuable stake in Six Flags Entertainment Corp (NYSE:SIX), which was worth $248.2 million at the end of the first quarter. On the second spot was D E Shaw which amassed $104.6 million worth of shares. Moreover, Cardinal Capital, Two Sigma Advisors, and Arrowstreet Capital were also bullish on Six Flags Entertainment Corp (NYSE:SIX), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, specific money managers have jumped into Six Flags Entertainment Corp (NYSE:SIX) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the most outsized position in Six Flags Entertainment Corp (NYSE:SIX). Two Sigma Advisors had $65.4 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $4.4 million investment in the stock during the quarter. The following funds were also among the new SIX investors: Brad Dunkley and Blair Levinsky's Waratah Capital Advisors, Matthew Drapkin and Steven R. Becker's Becker Drapkin Management, and David Costen Haley's HBK Investments.
Let's now review hedge fund activity in other stocks similar to Six Flags Entertainment Corp (NYSE:SIX). We will take a look at CVR Energy, Inc. (NYSE:CVI), Lazard Ltd (NYSE:LAZ), 2U Inc (NASDAQ:TWOU), and The Wendy's Company (NASDAQ:WEN). This group of stocks' market values are similar to SIX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVI,22,3050956,0 LAZ,16,580657,0 TWOU,19,155362,8 WEN,27,914054,1 Average,21,1175257,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $1175 million. That figure was $650 million in SIX's case. The Wendy's Company (NASDAQ:WEN) is the most popular stock in this table. On the other hand Lazard Ltd (NYSE:LAZ) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Six Flags Entertainment Corp (NYSE:SIX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on SIX as the stock returned 3.5% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.