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Hedge Funds Have Never Been This Bullish On The Michaels Companies, Inc. (MIK)

Is The Michaels Companies, Inc. (NASDAQ:MIK) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

The Michaels Companies, Inc. (NASDAQ:MIK) investors should pay attention to an increase in enthusiasm from smart money recently. MIK was in 32 hedge funds’ portfolios at the end of March. There were 30 hedge funds in our database with MIK holdings at the end of the previous quarter. Our calculations also showed that mik isn’t among the 30 most popular stocks among hedge funds.

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 market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Steven Tananbaum - GoldenTree Asset Management

Let’s take a peek at the key hedge fund action surrounding The Michaels Companies, Inc. (NASDAQ:MIK).

What have hedge funds been doing with The Michaels Companies, Inc. (NASDAQ:MIK)?

At Q1’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 28 hedge funds with a bullish position in MIK a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

No of Hedge Funds with MIK Positions

The largest stake in The Michaels Companies, Inc. (NASDAQ:MIK) was held by Highfields Capital Management, which reported holding $37.6 million worth of stock at the end of March. It was followed by Citadel Investment Group with a $14.8 million position. Other investors bullish on the company included Millennium Management, Tyvor Capital, and GoldenTree Asset Management.

As aggregate interest increased, specific money managers have been driving this bullishness. Tremblant Capital, managed by Brett Barakett, created the biggest position in The Michaels Companies, Inc. (NASDAQ:MIK). Tremblant Capital had $7.4 million invested in the company at the end of the quarter. Brett Barakett’s Tremblant Capital also made a $7.1 million investment in the stock during the quarter. The other funds with brand new MIK positions are Jim Simons’s Renaissance Technologies, Anand Parekh’s Alyeska Investment Group, and Matthew Tewksbury’s Stevens Capital Management.

Let’s now review hedge fund activity in other stocks similar to The Michaels Companies, Inc. (NASDAQ:MIK). We will take a look at Northwest Bancshares, Inc. (NASDAQ:NWBI), InVitae Corporation (NYSE:NVTA), Great Western Bancorp Inc (NYSE:GWB), and Tri Pointe Group Inc (NYSE:TPH). This group of stocks’ market values match MIK’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NWBI 11 68814 2
NVTA 28 348354 4
GWB 14 55991 3
TPH 18 134709 3
Average 17.75 151967 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $152 million. That figure was $158 million in MIK’s case. InVitae Corporation (NYSE:NVTA) is the most popular stock in this table. On the other hand Northwest Bancshares, Inc. (NASDAQ:NWBI) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks The Michaels Companies, Inc. (NASDAQ:MIK) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately MIK wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MIK were disappointed as the stock returned -19.9% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.

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

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