How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Macquarie Infrastructure Company LLC (NYSE:MIC).
Is Macquarie Infrastructure Company LLC (NYSE:MIC) a bargain? Hedge funds are becoming less hopeful. The number of long hedge fund bets was trimmed by 11 lately. MIC was in 58 hedge funds’ portfolios at the end of the fourth quarter of 2015. There were 69 hedge funds in our database with MIC positions at the end of the previous 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 Helmerich & Payne, Inc. (NYSE:HP), Carlisle Companies, Inc. (NYSE:CSL), and VimpelCom Ltd (ADR) (NYSE:VIP) to gather more data points.
Follow Macquarie Infrastructure Corp (NYSE:MIC)
Follow Macquarie Infrastructure Corp (NYSE:MIC)
In the 21st century investor’s toolkit there are several indicators investors have at their disposal to assess publicly traded companies. Some of the less known indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat their index-focused peers by a significant amount (see the details here).
Macquarie Infrastructure’s stock has declined by more than 21% over the last 52 weeks. For the last year, the company reported revenue of $1.64 billion, higher than the $1.35 billion posted for 2014. At the same time, it generated a loss of $1.69 per share and declared a dividend of $1.15 per share for the fourth quarter, which translates into an annualized dividend of $4.60 per share, giving its stock a yield of 7.36%. “We are pleased to have grown our dividend in excess of our guidance,” MIC’s CEO James Hooke was quoted as saying in a statement. For the current year, the company expects to further increase its dividend to the range between $5.00 and $5.10 per share.
Keeping this in mind, we’re going to review the key action surrounding Macquarie Infrastructure Company LLC (NYSE:MIC).
How have ‘hedgies’ been trading Macquarie Infrastructure Company LLC (NYSE:MIC)?
At the end of the fourth quarter, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, MSDC Management, managed by Marc Lisker, Glenn Fuhrman and John Phelan, holds the number one position in Macquarie Infrastructure Company LLC (NYSE:MIC). MSDC Management has a $298 million position in the stock, comprising 12.6% of its 13F portfolio. The second most bullish fund manager is Brenner West Capital Partners, managed by Joshua Kaufman and Craig Nerenberg, which holds a $154.5 million position; the fund has 16.3% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include Robert Boucai’s Newbrook Capital Advisors, Bernard Selz’s Selz Capital and Eric Edidin and Josh Lobel’s Archer Capital Management.
Since Macquarie Infrastructure Company LLC (NYSE:MIC) has faced falling interest from the smart money, we can see that there lies a certain “tier” of hedgies that decided to sell off their positions entirely last quarter. It’s worth mentioning that Doug Silverman and Alexander Klabin’s Senator Investment Group dumped the largest investment of the “upper crust” of funds followed by Insider Monkey, comprising close to $132 million in stock. Richard McGuire’s fund, Marcato Capital Management, also cut its stock, about $37.3 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 11 funds during the fourth quarter.
Let’s go over hedge fund activity in other stocks similar to Macquarie Infrastructure Company LLC (NYSE:MIC). We will take a look at Helmerich & Payne, Inc. (NYSE:HP), Carlisle Companies, Inc. (NYSE:CSL), VimpelCom Ltd (ADR) (NYSE:VIP), and Plains GP Holdings LP (NYSE:PAGP). This group of stocks’ market caps matches MIC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HP | 26 | 305709 | -1 |
| CSL | 24 | 309858 | 1 |
| VIP | 17 | 108739 | 5 |
| PAGP | 22 | 283662 | -5 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $252 million. That figure was $1.33 billion in MIC’s case. Helmerich & Payne, Inc. (NYSE:HP) is the most popular stock in this table. On the other hand VimpelCom Ltd (ADR) (NYSE:VIP) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Macquarie Infrastructure Company LLC (NYSE:MIC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
