We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. That’s a big deal.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is Mobile Mini Inc (NASDAQ:MINI) a buy right now? Investors who are in the know are becoming hopeful. The number of long hedge fund bets increased by 5 in recent months. Our calculations also showed that MINI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Parag Vora of HG Vora Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to take a glance at the new hedge fund action regarding Mobile Mini Inc (NASDAQ:MINI).
How are hedge funds trading Mobile Mini Inc (NASDAQ:MINI)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MINI over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Elliott Management was the largest shareholder of Mobile Mini Inc (NASDAQ:MINI), with a stake worth $73.7 million reported as of the end of September. Trailing Elliott Management was Fisher Asset Management, which amassed a stake valued at $22.3 million. Rubric Capital Management, Millennium Management, and Citadel Investment Group 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 Rubric Capital Management allocated the biggest weight to Mobile Mini Inc (NASDAQ:MINI), around 1.15% of its 13F portfolio. HG Vora Capital Management is also relatively very bullish on the stock, setting aside 1.06 percent of its 13F equity portfolio to MINI.
Now, key money managers were leading the bulls’ herd. Elliott Management, managed by Paul Singer, assembled the biggest position in Mobile Mini Inc (NASDAQ:MINI). Elliott Management had $73.7 million invested in the company at the end of the quarter. David Rosen’s Rubric Capital Management also initiated a $12.6 million position during the quarter. The other funds with new positions in the stock are Parag Vora’s HG Vora Capital Management, Louis Bacon’s Moore Global Investments, and Clint Carlson’s Carlson Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mobile Mini Inc (NASDAQ:MINI) but similarly valued. We will take a look at Gray Television, Inc. (NYSE:GTN), Livongo Health, Inc. (NASDAQ:LVGO), Heartland Financial USA Inc (NASDAQ:HTLF), and NIO Limited (NYSE:NIO). This group of stocks’ market values are similar to MINI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GTN | 23 | 206495 | -2 |
| LVGO | 15 | 48907 | 15 |
| HTLF | 9 | 24829 | 1 |
| NIO | 13 | 31011 | -1 |
| Average | 15 | 77811 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $194 million in MINI’s case. Gray Television, Inc. (NYSE:GTN) is the most popular stock in this table. On the other hand Heartland Financial USA Inc (NASDAQ:HTLF) is the least popular one with only 9 bullish hedge fund positions. Mobile Mini Inc (NASDAQ:MINI) 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 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. Unfortunately MINI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MINI were disappointed as the stock returned 3.7% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
