Hedge Funds Are Buying MarineMax, Inc. (HZO)

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. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded MarineMax, Inc. (NYSE:HZO) and determine whether the smart money was really smart about this stock.

MarineMax, Inc. (NYSE:HZO) was in 10 hedge funds’ portfolios at the end of March. HZO shareholders have witnessed an increase in enthusiasm from smart money of late. There were 8 hedge funds in our database with HZO positions at the end of the previous quarter. Our calculations also showed that HZO 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. 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. Now we’re going to go over the latest hedge fund action regarding MarineMax, Inc. (NYSE:HZO).

How are hedge funds trading MarineMax, Inc. (NYSE:HZO)?

At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HZO over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Is HZO A Good Stock To Buy?

More specifically, GLG Partners was the largest shareholder of MarineMax, Inc. (NYSE:HZO), with a stake worth $1.1 million reported as of the end of September. Trailing GLG Partners was Arrowstreet Capital, which amassed a stake valued at $1 million. Engineers Gate Manager, D E Shaw, and Algert Coldiron Investors 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 Algert Coldiron Investors allocated the biggest weight to MarineMax, Inc. (NYSE:HZO), around 0.11% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to HZO.

Now, some big names were breaking ground themselves. GLG Partners, managed by Noam Gottesman, created the biggest position in MarineMax, Inc. (NYSE:HZO). GLG Partners had $1.1 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $0.3 million investment in the stock during the quarter. The other funds with brand new HZO positions are D. E. Shaw’s D E Shaw, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and David Harding’s Winton Capital Management.

Let’s now review hedge fund activity in other stocks similar to MarineMax, Inc. (NYSE:HZO). We will take a look at eGain Corporation (NASDAQ:EGAN), CorePoint Lodging Inc. (NYSE:CPLG), Xunlei Ltd (NASDAQ:XNET), and Metropolitan Bank Holding Corp. (NYSE:MCB). This group of stocks’ market valuations match HZO’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EGAN 9 17966 0
CPLG 10 17084 -1
XNET 4 1229 -2
MCB 7 22530 0
Average 7.5 14702 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $4 million in HZO’s case. CorePoint Lodging Inc. (NYSE:CPLG) is the most popular stock in this table. On the other hand Xunlei Ltd (NASDAQ:XNET) is the least popular one with only 4 bullish hedge fund positions. MarineMax, Inc. (NYSE:HZO) 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 HZO as the stock returned 114.9% in Q2 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.