Will the new coronavirus cause a recession in US in the next 6 months? On February 27th, we put the probability at 75% and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Manulife Financial Corporation (NYSE:MFC).
Manulife Financial Corporation (NYSE:MFC) shares haven’t seen a lot of action during the fourth quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of the fourth quarter of 2019. At the end of this article we will also compare MFC to other stocks including FedEx Corporation (NYSE:FDX), The Kraft Heinz Company (NASDAQ:KHC), and NetEase, Inc (NASDAQ:NTES) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are tons of tools investors have at their disposal to appraise their holdings. A duo of the most innovative tools are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the broader indices by a very impressive amount (see the details here).
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Now we’re going to take a look at the key hedge fund action surrounding Manulife Financial Corporation (NYSE:MFC).
What have hedge funds been doing with Manulife Financial Corporation (NYSE:MFC)?
At the end of the fourth quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the third quarter of 2019. By comparison, 20 hedge funds held shares or bullish call options in MFC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Manulife Financial Corporation (NYSE:MFC) was held by Renaissance Technologies, which reported holding $97.8 million worth of stock at the end of September. It was followed by Galibier Capital Management with a $37.8 million position. Other investors bullish on the company included Heathbridge Capital Management, Balyasny Asset Management, and GLG Partners. In terms of the portfolio weights assigned to each position Galibier Capital Management allocated the biggest weight to Manulife Financial Corporation (NYSE:MFC), around 11.99% of its 13F portfolio. Heathbridge Capital Management is also relatively very bullish on the stock, dishing out 6.49 percent of its 13F equity portfolio to MFC.
Judging by the fact that Manulife Financial Corporation (NYSE:MFC) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedge funds that elected to cut their full holdings by the end of the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $61.6 million in stock. Lee Ainslie’s fund, Maverick Capital, also dumped its stock, about $1.8 million worth. These bearish behaviors are interesting, as aggregate 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 Manulife Financial Corporation (NYSE:MFC) but similarly valued. We will take a look at FedEx Corporation (NYSE:FDX), The Kraft Heinz Company (NASDAQ:KHC), NetEase, Inc (NASDAQ:NTES), and Mizuho Financial Group Inc. (NYSE:MFG). This group of stocks’ market values are closest to MFC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FDX | 45 | 1481070 | 0 |
| KHC | 34 | 10747172 | -5 |
| NTES | 44 | 3818274 | 12 |
| MFG | 5 | 15118 | 1 |
| Average | 32 | 4015409 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $4015 million. That figure was $284 million in MFC’s case. FedEx Corporation (NYSE:FDX) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 5 bullish hedge fund positions. Manulife Financial Corporation (NYSE:MFC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but beat the market by 3.1 percentage points. Unfortunately MFC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MFC investors were disappointed as the stock returned -29.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
