At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not The Marcus Corporation (NYSE:MCS) makes for a good investment right now.
The Marcus Corporation (NYSE:MCS) was in 10 hedge funds' portfolios at the end of the third quarter of 2019. MCS has seen a decrease in activity from the world's largest hedge funds in recent months. There were 14 hedge funds in our database with MCS positions at the end of the previous quarter. Our calculations also showed that MCS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's analyze the recent hedge fund action encompassing The Marcus Corporation (NYSE:MCS).
Hedge fund activity in The Marcus Corporation (NYSE:MCS)
At Q3's end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MCS over the last 17 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, GAMCO Investors was the largest shareholder of The Marcus Corporation (NYSE:MCS), with a stake worth $30.8 million reported as of the end of September. Trailing GAMCO Investors was Arrowstreet Capital, which amassed a stake valued at $5.2 million. Two Sigma Advisors, GLG Partners, and Millennium Management 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 GAMCO Investors allocated the biggest weight to The Marcus Corporation (NYSE:MCS), around 0.26% of its 13F portfolio. Ellington is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to MCS.
Seeing as The Marcus Corporation (NYSE:MCS) has faced declining sentiment from the smart money, we can see that there exists a select few funds who were dropping their full holdings heading into Q4. Intriguingly, Dmitry Balyasny's Balyasny Asset Management dumped the biggest investment of the "upper crust" of funds monitored by Insider Monkey, valued at close to $0.5 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund sold off about $0.5 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as The Marcus Corporation (NYSE:MCS) but similarly valued. These stocks are Coeur Mining, Inc. (NYSE:CDE), AZZ Inc. (NYSE:AZZ), Radware Ltd. (NASDAQ:RDWR), and Orchard Therapeutics plc (NASDAQ:ORTX). All of these stocks' market caps resemble MCS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CDE,14,51790,4 AZZ,15,45998,1 RDWR,15,309696,-1 ORTX,19,287447,-2 Average,15.75,173733,0.5 [/table]
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $174 million. That figure was $47 million in MCS's case. Orchard Therapeutics plc (NASDAQ:ORTX) is the most popular stock in this table. On the other hand Coeur Mining, Inc. (NYSE:CDE) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks The Marcus Corporation (NYSE:MCS) is even less popular than CDE. Hedge funds dodged a bullet by taking a bearish stance towards MCS. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MCS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MCS investors were disappointed as the stock returned -14.6% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
