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Should You Buy Michaels Companies Inc (MIK)?

With a general bullishness amongst the heavyweights, specific money managers have jumped into Michaels Companies Inc (NASDAQ:MIK) headfirst. Scopus Asset Management, managed by Alexander Mitchell, initiated the most valuable position in Michaels Companies Inc (NASDAQ:MIK). Scopus Asset Management had $18.3 million invested in the company at the end of the quarter. Shashin Shah’s Think Investments also initiated a $17 million position during the quarter. The other funds with brand new MIK positions are John Overdeck and David Siegel’s Two Sigma Advisors, John A. Levin’s Levin Capital Strategies, and Paul Tudor Jones’ Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Michaels Companies Inc (NASDAQ:MIK) but similarly valued. We will take a look at Zillow Group, Inc.- Class C (NASDAQ:Z), Quanta Services Inc (NYSE:PWR), Acadia Healthcare Company Inc (NASDAQ:ACHC), and Carter’s, Inc. (NYSE:CRI). This group of stocks’ market valuations are similar to MIK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
Z 24 391528 1
PWR 30 488718 -8
ACHC 24 225903 1
CRI 46 1060432 0

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $542 million. That figure was $275 million in MIK’s case. Carter’s, Inc. (NYSE:CRI) is the most popular stock in this table. On the other hand Zillow Group, Inc.- Class C (NASDAQ:Z) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Michaels Companies Inc (NASDAQ:MIK) is even less popular than Z. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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