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Is Masonite International Corp (DOOR) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Masonite International Corp (NYSE:DOOR).

Masonite International Corp (NYSE:DOOR) was in 26 hedge funds’ portfolios at the end of the first quarter of 2020. DOOR shareholders have witnessed an increase in support from the world’s most elite money managers of late. There were 21 hedge funds in our database with DOOR holdings at the end of the previous quarter. Our calculations also showed that DOOR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Kevin Oram Praesidium Investment Management

Kevin Oram of Praesidium Investment Management Company

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to analyze the key hedge fund action surrounding Masonite International Corp (NYSE:DOOR).

What does smart money think about Masonite International Corp (NYSE:DOOR)?

Heading into the second quarter of 2020, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards DOOR over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Praesidium Investment Management Company was the largest shareholder of Masonite International Corp (NYSE:DOOR), with a stake worth $105 million reported as of the end of September. Trailing Praesidium Investment Management Company was Pzena Investment Management, which amassed a stake valued at $29.1 million. Sunriver Management, Renaissance Technologies, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to Masonite International Corp (NYSE:DOOR), around 8.5% of its 13F portfolio. Sunriver Management is also relatively very bullish on the stock, designating 5.1 percent of its 13F equity portfolio to DOOR.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Columbus Circle Investors, managed by Principal Global Investors, established the most outsized position in Masonite International Corp (NYSE:DOOR). Columbus Circle Investors had $7.2 million invested in the company at the end of the quarter. Len Kipp and Xavier Majic’s Maple Rock Capital also made a $3.8 million investment in the stock during the quarter. The following funds were also among the new DOOR investors: Richard Driehaus’s Driehaus Capital, Greg Eisner’s Engineers Gate Manager, and Sander Gerber’s Hudson Bay Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Masonite International Corp (NYSE:DOOR) but similarly valued. We will take a look at Grupo Simec S.A.B. de C.V. (NYSE:SIM), Yext, Inc. (NYSE:YEXT), Monmouth Real Estate Investment Corp. (NYSE:MNR), and Canada Goose Holdings Inc. (NYSE:GOOS). This group of stocks’ market valuations are similar to DOOR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SIM 1 1807 0
YEXT 9 18486 -4
MNR 12 61577 -2
GOOS 26 220589 6
Average 12 75615 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $271 million in DOOR’s case. Canada Goose Holdings Inc. (NYSE:GOOS) is the most popular stock in this table. On the other hand Grupo Simec S.A.B. de C.V. (NYSE:SIM) is the least popular one with only 1 bullish hedge fund positions. Masonite International Corp (NYSE:DOOR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on DOOR as the stock returned 39.9% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.