The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards The Michaels Companies, Inc. (NASDAQ:MIK).
Is The Michaels Companies, Inc. (NASDAQ:MIK) a buy, sell, or hold? The best stock pickers are turning bullish. The number of bullish hedge fund positions went up by 4 recently. Our calculations also showed that MIK isn’t among the 30 most popular stocks among hedge funds. MIK was in 30 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 26 hedge funds in our database with MIK positions at the end of the previous quarter.
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 32 percentage points since May 2014 through March 12, 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.
Let’s take a look at the fresh hedge fund action encompassing The Michaels Companies, Inc. (NASDAQ:MIK).
How are hedge funds trading The Michaels Companies, Inc. (NASDAQ:MIK)?
Heading into the first quarter of 2019, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in MIK a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jonathon Jacobson’s Highfields Capital Management has the biggest position in The Michaels Companies, Inc. (NASDAQ:MIK), worth close to $98.7 million, accounting for 5.1% of its total 13F portfolio. The second largest stake is held by Steven Tananbaum of GoldenTree Asset Management, with a $26.8 million position; 4.2% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism contain Israel Englander’s Millennium Management, Lee Ainslie’s Maverick Capital and D. E. Shaw’s D E Shaw.
Now, key hedge funds were breaking ground themselves. Highfields Capital Management, managed by Jonathon Jacobson, initiated the most valuable position in The Michaels Companies, Inc. (NASDAQ:MIK). Highfields Capital Management had $98.7 million invested in the company at the end of the quarter. Vasan Kesavan, Srikumar Kesavan and Sandeep Ramesh’s Meghalaya Partners also made a $4 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Israel Englander’s Millennium Management.
Let’s now take a look at hedge fund activity in other stocks similar to The Michaels Companies, Inc. (NASDAQ:MIK). These stocks are Nelnet, Inc. (NYSE:NNI), Avanos Medical, Inc. (NYSE:AVNS), Advanced Disposal Services, Inc. (NYSE:ADSW), and RPC, Inc. (NYSE:RES). All of these stocks’ market caps resemble MIK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NNI | 14 | 68393 | -1 |
| AVNS | 14 | 45065 | -3 |
| ADSW | 15 | 123133 | 3 |
| RES | 12 | 96642 | -3 |
| Average | 13.75 | 83308 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $256 million in MIK’s case. Advanced Disposal Services, Inc. (NYSE:ADSW) is the most popular stock in this table. On the other hand RPC, Inc. (NYSE:RES) is the least popular one with only 12 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately MIK wasn’t nearly as popular as these 15 stock and hedge funds that were betting on MIK were disappointed as the stock returned -8.4% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
