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Was The Smart Money Right About Masco Corporation (MAS)?

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2020. In this article we are going to take a look at smart money sentiment towards Masco Corporation (NYSE:MAS).

Is Masco Corporation (NYSE:MAS) a first-rate investment today? Investors who are in the know were selling. The number of bullish hedge fund positions dropped by 6 in recent months. Masco Corporation (NYSE:MAS) was in 40 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 51. Our calculations also showed that MAS isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 46 hedge funds in our database with MAS positions at the end of the third quarter.

To most stock holders, hedge funds are perceived as unimportant, outdated financial tools of the past. While there are more than 8000 funds trading at present, Our researchers choose to focus on the moguls of this group, about 850 funds. These investment experts manage the lion's share of all hedge funds' total capital, and by shadowing their first-class equity investments, Insider Monkey has formulated a few investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 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 leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. Keeping this in mind let's take a peek at the new hedge fund action surrounding Masco Corporation (NYSE:MAS).

Do Hedge Funds Think MAS Is A Good Stock To Buy Now?

At fourth quarter's end, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. By comparison, 45 hedge funds held shares or bullish call options in MAS a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Arrowstreet Capital was the largest shareholder of Masco Corporation (NYSE:MAS), with a stake worth $135.2 million reported as of the end of December. Trailing Arrowstreet Capital was Renaissance Technologies, which amassed a stake valued at $71.8 million. Ariel Investments, GLG Partners, and Millennium Management 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 SAYA Management allocated the biggest weight to Masco Corporation (NYSE:MAS), around 9.23% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, earmarking 3.36 percent of its 13F equity portfolio to MAS.

Judging by the fact that Masco Corporation (NYSE:MAS) has witnessed a decline in interest from the aggregate hedge fund industry, it's easy to see that there exists a select few hedge funds that decided to sell off their entire stakes heading into Q1. At the top of the heap, James Dinan's York Capital Management said goodbye to the largest stake of the "upper crust" of funds tracked by Insider Monkey, valued at an estimated $13.8 million in stock. Principal Global Investors's fund, Columbus Circle Investors, also cut its stock, about $10.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds heading into Q1.

Let's now take a look at hedge fund activity in other stocks similar to Masco Corporation (NYSE:MAS). These stocks are Gartner Inc (NYSE:IT), Generac Holdings Inc. (NYSE:GNRC), Markel Corporation (NYSE:MKL), Tradeweb Markets Inc. (NASDAQ:TW), Jacobs Engineering Group Inc. (NYSE:J), Plug Power, Inc. (NASDAQ:PLUG), and Avangrid, Inc. (NYSE:AGR). This group of stocks' market caps are similar to MAS's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IT,37,1939657,-1 GNRC,32,559613,-11 MKL,36,941576,2 TW,31,330948,7 J,30,1038493,3 PLUG,21,734364,0 AGR,10,64954,-1 Average,28.1,801372,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.1 hedge funds with bullish positions and the average amount invested in these stocks was $801 million. That figure was $712 million in MAS's case. Gartner Inc (NYSE:IT) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Masco Corporation (NYSE:MAS) is more popular among hedge funds. Our overall hedge fund sentiment score for MAS is 72.5. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on MAS as the stock returned 16.6% since the end of December (through 4/30) 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.

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Disclosure: None. This article was originally published at Insider Monkey.

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