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Hedge Funds Cashing Out Of Ferrari N.V. (RACE)

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 Ferrari N.V. (NYSE:RACE).

Is Ferrari N.V. (NYSE:RACE) a good investment now? The smart money is getting less bullish. The number of bullish hedge fund bets decreased by 7 recently. Our calculations also showed that RACE 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 21st century investor’s toolkit there are a multitude of metrics investors have at their disposal to size up publicly traded companies. A pair of the most under-the-radar metrics are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top fund managers can beat the market by a superb margin (see the details here).

Daniel Sundheim D1 Capital

Daniel Sundheim of D1 Capital Partners

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a gander at the key hedge fund action encompassing Ferrari N.V. (NYSE:RACE).

How have hedgies been trading Ferrari N.V. (NYSE:RACE)?

At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in RACE 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 boosting their holdings significantly (or already accumulated large positions).

More specifically, Ako Capital was the largest shareholder of Ferrari N.V. (NYSE:RACE), with a stake worth $395.3 million reported as of the end of September. Trailing Ako Capital was D1 Capital Partners, which amassed a stake valued at $375.5 million. Darsana Capital Partners, Third Point, and Melvin Capital 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 Alatus Capital allocated the biggest weight to Ferrari N.V. (NYSE:RACE), around 53.25% of its 13F portfolio. Aquamarine Capital Management is also relatively very bullish on the stock, earmarking 21.3 percent of its 13F equity portfolio to RACE.

Seeing as Ferrari N.V. (NYSE:RACE) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of funds that decided to sell off their positions entirely by the end of the first quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest stake of the 750 funds watched by Insider Monkey, worth close to $50.5 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $13.7 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 7 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks similar to Ferrari N.V. (NYSE:RACE). These stocks are Norfolk Southern Corp. (NYSE:NSC), BCE Inc. (NYSE:BCE), Vodafone Group Plc (NASDAQ:VOD), and ABB Ltd (NYSE:ABB). This group of stocks’ market caps match RACE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NSC 51 1172825 -1
BCE 13 204550 -6
VOD 14 598782 -2
ABB 10 277115 0
Average 22 563318 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $563 million. That figure was $1730 million in RACE’s case. Norfolk Southern Corp. (NYSE:NSC) is the most popular stock in this table. On the other hand ABB Ltd (NYSE:ABB) is the least popular one with only 10 bullish hedge fund positions. Ferrari N.V. (NYSE:RACE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately RACE wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on RACE were disappointed as the stock returned 11.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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