Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on several financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Ferrari N.V. (NYSE:RACE) based on that data.
Ferrari N.V. (NYSE:RACE) investors should be aware of a decrease in enthusiasm from smart money registered between July and September. There were 16 hedge funds in our database with RACE holdings at the end of the third quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Motorola Solutions Inc (NYSE:MSI), McCormick & Company, Incorporated (NYSE:MKC), and Alliance Data Systems Corporation (NYSE:ADS) to gather more data points.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
Now, we’re going to take a glance at the fresh action surrounding Ferrari N.V. (NYSE:RACE).
How are hedge funds trading Ferrari N.V. (NYSE:RACE)?
At the end of September, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on Ferrari N.V., down by one fund from the previous quarter. By comparison, 17 hedge funds held shares or bullish call options in RACE heading into this year. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Robert Pohly’s Samlyn Capital has the biggest position in Ferrari N.V. (NYSE:RACE), worth close to $87 million, comprising 2.1% of its total 13F portfolio. The second most bullish fund manager is Alex Duran and Scott Hendrickson’s Permian Investment Partners, with a $63.6 million position; 12.2% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions comprise Mohnish Pabrai’s Dalal Street, Quincy Lee’s Ancient Art (Teton Capital), and Carson Yost’s Yost Capital Management. We should note that Yost Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Since Ferrari N.V. (NYSE:RACE) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of money managers that slashed their entire stakes during the third quarter. At the top of the heap, Barry Rosenstein’s JANA Partners dropped the biggest investment of all the investors followed by Insider Monkey, worth about $67.5 million in stock. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its call options, about $0.8 million worth.
Let’s now review hedge fund activity in other stocks similar to Ferrari N.V. (NYSE:RACE). These stocks are Motorola Solutions Inc (NYSE:MSI), McCormick & Company, Incorporated (NYSE:MKC), Alliance Data Systems Corporation (NYSE:ADS), and EQT Corporation (NYSE:EQT). All of these stocks’ market caps are similar to RACE’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 27 funds with bullish positions and the average amount invested in these stocks was $839 million, compared to $273 million in RACE’s case. Alliance Data Systems Corporation (NYSE:ADS) is the most popular stock in this table. On the other hand McCormick & Company, Incorporated (NYSE:MKC) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Ferrari N.V. (NYSE:RACE) is even less popular than McCormick & Company, Incorporated (NYSE:MKC). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.