Hedge Funds Done Selling Macquarie Infrastructure Corporation (MIC)?

“The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak,” are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Macquarie Infrastructure Corporation (NYSE:MIC) and see how it was affected.

Macquarie Infrastructure Corporation (NYSE:MIC) was in 26 hedge funds’ portfolios at the end of the third quarter of 2019. MIC has experienced a decrease in hedge fund interest of late. There were 28 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 Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are many gauges investors put to use to analyze their holdings. Some of the less known gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the broader indices by a solid amount (see the details here).

Mario Gabelli of GAMCO Investors

Mario Gabelli of GAMCO Investors

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s view the latest hedge fund action surrounding Macquarie Infrastructure Corporation (NYSE:MIC).

How are hedge funds trading Macquarie Infrastructure Corporation (NYSE:MIC)?

At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MIC over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

No of Hedge Funds with MIC Positions

Among these funds, Renaissance Technologies held the most valuable stake in Macquarie Infrastructure Corporation (NYSE:MIC), which was worth $62.3 million at the end of the third quarter. On the second spot was GAMCO Investors which amassed $39.1 million worth of shares. Hawk Ridge Management, Polar Capital, and Cove Street Capital 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 Hawk Ridge Management allocated the biggest weight to Macquarie Infrastructure Corporation (NYSE:MIC), around 6.32% of its portfolio. Dorset Management is also relatively very bullish on the stock, designating 2.92 percent of its 13F equity portfolio to MIC.

Judging by the fact that Macquarie Infrastructure Corporation (NYSE:MIC) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of fund managers that slashed their positions entirely by the end of the third quarter. Interestingly, Israel Englander’s Millennium Management sold off the largest position of all the hedgies watched by Insider Monkey, comprising close to $6.4 million in stock. Clint Carlson’s fund, Carlson Capital, also said goodbye to its stock, about $4.9 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.

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. These stocks are The Descartes Systems Group Inc (NASDAQ:DSGX), Axon Enterprise, Inc. (NASDAQ:AAXN), Tegna Inc (NYSE:TGNA), and Terreno Realty Corporation (NYSE:TRNO). This group of stocks’ market values are closest to MIC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DSGX 14 126013 3
AAXN 14 209400 -2
TGNA 18 359437 3
TRNO 10 51158 1
Average 14 186502 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was $232 million in MIC’s case. Tegna Inc (NYSE:TGNA) is the most popular stock in this table. On the other hand Terreno Realty Corporation (NYSE:TRNO) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Macquarie Infrastructure Corporation (NYSE:MIC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on MIC, though not to the same extent, as the stock returned 8.9% during the fourth quarter (through the end of November) and outperformed the market as well.

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