Did Hedge Funds Make The Right Call On Macquarie Infrastructure Corporation (MIC) ?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Macquarie Infrastructure Corporation (NYSE:MIC) at the end of the first quarter and determine whether the smart money was really smart about this stock.

Macquarie Infrastructure Corporation (NYSE:MIC) investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. MIC was in 30 hedge funds’ portfolios at the end of March. There were 34 hedge funds in our database with MIC positions at the end of the previous quarter. Our calculations also showed that MIC 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.

In the financial world there are numerous signals shareholders can use to analyze stocks. A pair of the most innovative signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can beat the broader indices by a healthy margin (see the details here).


Louis Bacon Moore of Moore Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Keeping this in mind let’s take a look at the key hedge fund action regarding Macquarie Infrastructure Corporation (NYSE:MIC).

Hedge fund activity in Macquarie Infrastructure Corporation (NYSE:MIC)

At Q1’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the fourth quarter of 2019. On the other hand, there were a total of 24 hedge funds with a bullish position in MIC 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.

Is MIC A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, Ricky Sandler’s Eminence Capital has the most valuable position in Macquarie Infrastructure Corporation (NYSE:MIC), worth close to $67.1 million, corresponding to 0.7% of its total 13F portfolio. Coming in second is Renaissance Technologies, which holds a $33.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that hold long positions consist of David Rosen’s Rubric Capital Management, Mario Gabelli’s GAMCO Investors and Jeffrey Bronchick’s Cove Street Capital. In terms of the portfolio weights assigned to each position Litespeed Management allocated the biggest weight to Macquarie Infrastructure Corporation (NYSE:MIC), around 14.81% of its 13F portfolio. Rubric Capital Management is also relatively very bullish on the stock, dishing out 4.91 percent of its 13F equity portfolio to MIC.

Judging by the fact that Macquarie Infrastructure Corporation (NYSE:MIC) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedge funds that decided to sell off their full holdings heading into Q4. Intriguingly, David Brown’s Hawk Ridge Management sold off the biggest stake of the “upper crust” of funds monitored by Insider Monkey, totaling close to $15.7 million in stock. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $6.2 million worth. These moves are interesting, as total hedge fund interest was cut by 4 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Macquarie Infrastructure Corporation (NYSE:MIC) but similarly valued. We will take a look at LivaNova PLC (NASDAQ:LIVN), GATX Corporation (NYSE:GATX), Franklin Electric Co. (NASDAQ:FELE), and Sprouts Farmers Market Inc (NASDAQ:SFM). This group of stocks’ market values match MIC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LIVN 24 235932 2
GATX 13 169186 -8
FELE 16 174928 2
SFM 30 312185 0
Average 20.75 223058 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $223 million. That figure was $252 million in MIC’s case. Sprouts Farmers Market Inc (NASDAQ:SFM) is the most popular stock in this table. On the other hand GATX Corporation (NYSE:GATX) is the least popular one with only 13 bullish hedge fund positions. Macquarie Infrastructure Corporation (NYSE:MIC) 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on MIC, though not to the same extent, as the stock returned 21.5% during the second quarter and outperformed the market as well.

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