Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Masco Corporation (NYSE:MAS) to find out whether there were any major changes in hedge funds’ views.
Is MAS stock a buy or sell? Masco Corporation (NYSE:MAS) investors should be aware of a decrease in enthusiasm from smart money of late. Masco Corporation (NYSE:MAS) was in 40 hedge funds’ portfolios at the end of December. The all time high for this statistic is 51. There were 46 hedge funds in our database with MAS holdings at the end of September. Our calculations also showed that MAS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
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Do Hedge Funds Think MAS Is A Good Stock To Buy Now?
At Q4’s end, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in MAS over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the largest position in Masco Corporation (NYSE:MAS). Arrowstreet Capital has a $135.2 million position in the stock, comprising 0.2% of its 13F portfolio. On Arrowstreet Capital’s heels is Renaissance Technologies, holding a $71.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of John W. Rogers’s Ariel Investments, Noam Gottesman’s GLG Partners and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position SAYA Management allocated the biggest weight to Masco Corporation (NYSE:MAS), around 9.23% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, dishing out 3.36 percent of its 13F equity portfolio to MAS.
Since Masco Corporation (NYSE:MAS) has witnessed bearish sentiment from the smart money, it’s easy to see that there was a specific group of funds that decided to sell off their full holdings by the end of the fourth quarter. Interestingly, James Dinan’s York Capital Management dropped the biggest investment of all the hedgies monitored by Insider Monkey, comprising close to $13.8 million in stock. Principal Global Investors’s fund, Columbus Circle Investors, also dumped its stock, about $10.2 million worth. These moves are important to note, as total hedge fund interest fell by 6 funds by the end of the fourth quarter.
Let’s check out hedge fund activity in other stocks similar to Masco Corporation (NYSE:MAS). These stocks are Gartner Inc (NYSE:IT), Generac Holdings Inc. (NYSE:GNRC), Markel Corporation (NYSE:MKL), Tradeweb Markets Inc. (NASDAQ:TW), Jacobs Engineering Group Inc. (NYSE:J), Plug Power, Inc. (NASDAQ:PLUG), and Avangrid, Inc. (NYSE:AGR). All of these stocks’ market caps match MAS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.1 hedge funds with bullish positions and the average amount invested in these stocks was $801 million. That figure was $712 million in MAS’s case. Gartner Inc (NYSE:IT) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Masco Corporation (NYSE:MAS) is more popular among hedge funds. Our overall hedge fund sentiment score for MAS is 72.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on MAS, though not to the same extent, as the stock returned 4.6% since the end of December (through March 19th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.