Here’s What Hedge Funds Think About MasterCraft Boat Holdings, Inc. (MCFT)

“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) in order to identify whether reputable and successful top money managers continue to believe in its potential.

MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) investors should pay attention to a decrease in support from the world’s most elite money managers of late. Our calculations also showed that MCFT isn’t among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Noam Gottesman GLG Partners

Noam Gottesman, GLG Partners

We’re going to go over the new hedge fund action regarding MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT).

How are hedge funds trading MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT)?

Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards MCFT over the last 15 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

No of Hedge Funds with MCFT Positions

When looking at the institutional investors followed by Insider Monkey, Jim Simons’s Renaissance Technologies has the biggest position in MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT), worth close to $23.8 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Steven Baughman of Divisar Capital, with a $19.5 million position; 6.4% of its 13F portfolio is allocated to the company. Other peers that are bullish contain Chuck Royce’s Royce & Associates, Noam Gottesman’s GLG Partners and Cliff Asness’s AQR Capital Management.

Due to the fact that MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there were a few funds that elected to cut their positions entirely by the end of the third quarter. Interestingly, Israel Englander’s Millennium Management dropped the biggest stake of the 700 funds followed by Insider Monkey, totaling about $3.8 million in stock, and Louis Navellier’s Navellier & Associates was right behind this move, as the fund dropped about $1 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 4 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) but similarly valued. These stocks are Franklin Financial Network Inc (NYSE:FSB), One Madison Corporation (NYSE:OMAD), Foundation Building Materials, Inc. (NYSE:FBM), and Tribune Publishing Company (NASDAQ:TPCO). This group of stocks’ market valuations resemble MCFT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FSB 4 13855 -1
OMAD 13 65860 2
FBM 8 7482 2
TPCO 12 16378 -2
Average 9.25 25894 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $105 million in MCFT’s case. One Madison Corporation (NYSE:OMAD) is the most popular stock in this table. On the other hand Franklin Financial Network Inc (NYSE:FSB) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately MCFT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MCFT were disappointed as the stock returned -6.4% 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.