Is MBUU A Good Stock To Buy Now?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Malibu Boats Inc (NASDAQ:MBUU).

Hedge fund interest in Malibu Boats Inc (NASDAQ:MBUU) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that MBUU isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare MBUU to other stocks including Ferro Corporation (NYSE:FOE), Comstock Resources Inc (NYSE:CRK), and Franchise Group, Inc. (NASDAQ:FRG) to get a better sense of its popularity.

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

In the financial world there are several methods market participants employ to analyze stocks. A duo of the less known methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite money managers can trounce the broader indices by a solid margin (see the details here).

Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LP

Now we’re going to go over the fresh hedge fund action regarding Malibu Boats Inc (NASDAQ:MBUU).

Do Hedge Funds Think MBUU Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MBUU over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the largest position in Malibu Boats Inc (NASDAQ:MBUU). Renaissance Technologies has a $54.6 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Richard Driehaus of Driehaus Capital, with a $19.1 million position; 0.4% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Mark Coe’s Intrinsic Edge Capital and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Intrinsic Edge Capital allocated the biggest weight to Malibu Boats Inc (NASDAQ:MBUU), around 0.42% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, designating 0.39 percent of its 13F equity portfolio to MBUU.

Judging by the fact that Malibu Boats Inc (NASDAQ:MBUU) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedge funds that slashed their full holdings heading into Q4. It’s worth mentioning that Thomas E. Claugus’s GMT Capital sold off the largest investment of all the hedgies followed by Insider Monkey, comprising close to $1.5 million in stock. Paul Hondros’s fund, AlphaOne Capital Partners, also dropped its stock, about $0.8 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Malibu Boats Inc (NASDAQ:MBUU) but similarly valued. These stocks are Ferro Corporation (NYSE:FOE), Comstock Resources Inc (NYSE:CRK), Franchise Group, Inc. (NASDAQ:FRG), The Macerich Company (NYSE:MAC), DRDGOLD Ltd. (NYSE:DRD), Castle Biosciences, Inc. (NASDAQ:CSTL), and Suburban Propane Partners LP (NYSE:SPH). All of these stocks’ market caps match MBUU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FOE 15 145226 -3
CRK 24 123591 7
FRG 12 61800 -4
MAC 18 42563 -2
DRD 9 32197 7
CSTL 18 89583 0
SPH 3 11375 1
Average 14.1 72334 0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $120 million in MBUU’s case. Comstock Resources Inc (NYSE:CRK) is the most popular stock in this table. On the other hand Suburban Propane Partners LP (NYSE:SPH) is the least popular one with only 3 bullish hedge fund positions. Malibu Boats Inc (NASDAQ:MBUU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MBUU is 69. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on MBUU as the stock returned 28.7% since the end of Q3 (through 12/14) 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.