Did Hedge Funds Drop The Ball On Maxar Technologies Inc (MAXR) ?

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. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Maxar Technologies Inc (NYSE:MAXR).

Maxar Technologies Inc (NYSE:MAXR) shareholders have witnessed an increase in support from the world’s most elite money managers recently. Our calculations also showed that MAXR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Michael Burry Scion Capital

Michael Burry of Scion Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the fresh hedge fund action surrounding Maxar Technologies Inc (NYSE:MAXR).

How have hedgies been trading Maxar Technologies Inc (NYSE:MAXR)?

At Q1’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MAXR over the last 18 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.

According to Insider Monkey’s hedge fund database, Corriente Advisors, managed by Mark Hart III, holds the most valuable position in Maxar Technologies Inc (NYSE:MAXR). Corriente Advisors has a $18 million position in the stock, comprising 19.5% of its 13F portfolio. The second largest stake is held by Scion Asset Management, led by Michael Burry, holding a $9.6 million position; 11.2% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions consist of D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Corriente Advisors allocated the biggest weight to Maxar Technologies Inc (NYSE:MAXR), around 19.47% of its 13F portfolio. Scion Asset Management is also relatively very bullish on the stock, earmarking 11.19 percent of its 13F equity portfolio to MAXR.

As industrywide interest jumped, key hedge funds have jumped into Maxar Technologies Inc (NYSE:MAXR) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Maxar Technologies Inc (NYSE:MAXR). Balyasny Asset Management had $4.2 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also initiated a $0.9 million position during the quarter. The following funds were also among the new MAXR investors: Paul Tudor Jones’s Tudor Investment Corp, Cliff Asness’s AQR Capital Management, and Mika Toikka’s AlphaCrest Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Maxar Technologies Inc (NYSE:MAXR). We will take a look at CryoPort, Inc. (NASDAQ:CYRX), Arcus Biosciences, Inc. (NYSE:RCUS), Washington Trust Bancorp, Inc. (NASDAQ:WASH), and NexPoint Residential Trust, Inc. (NYSE:NXRT). This group of stocks’ market values are similar to MAXR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CYRX 9 48542 1
RCUS 23 51869 8
WASH 7 21341 2
NXRT 11 79180 -5
Average 12.5 50233 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $66 million in MAXR’s case. Arcus Biosciences, Inc. (NYSE:RCUS) is the most popular stock in this table. On the other hand Washington Trust Bancorp, Inc. (NASDAQ:WASH) is the least popular one with only 7 bullish hedge fund positions. Maxar Technologies Inc (NYSE:MAXR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on MAXR as the stock returned 74.8% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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