There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Marcus & Millichap Inc (NYSE:MMI) .
Marcus & Millichap Inc (NYSE:MMI) investors should pay attention to a decrease in support from the world’s most successful money managers recently. MMI was in 12 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with MMI holdings 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 Surgery Partners Inc (NASDAQ:SGRY), Lannett Company, Inc. (NYSEAMEX:LCI), and Array Biopharma Inc (NASDAQ:ARRY) to gather more data points.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
Now, we’re going to take a gander at the latest action surrounding Marcus & Millichap Inc (NYSE:MMI).
What does the smart money think about Marcus & Millichap Inc (NYSE:MMI)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the second quarter of 2016. On the other hand, there were a total of 18 hedge funds with a bullish position in MMI at the beginning of this year. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the largest position in Marcus & Millichap Inc (NYSE:MMI). Royce & Associates has a $63.2 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Route One Investment Company, led by William Duhamel, holding a $29.8 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Israel Englander’s Millennium Management, one of the largest hedge funds in the world, Phil Frohlich’s Prescott Group Capital Management and Jim Simons’s Renaissance Technologies. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.