Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Macquarie Infrastructure Corporation (NYSE:MIC) to find out whether there were any major changes in hedge funds' views.
Is Macquarie Infrastructure Corporation (NYSE:MIC) a buy, sell, or hold? Prominent investors were cutting their exposure. The number of long hedge fund positions shrunk by 11 in recent months. Macquarie Infrastructure Corporation (NYSE:MIC) was in 23 hedge funds' portfolios at the end of September. The all time high for this statistic is 69. Our calculations also showed that MIC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Sander Gerber of Hudson Bay Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let's view the fresh hedge fund action encompassing Macquarie Infrastructure Corporation (NYSE:MIC).
Do Hedge Funds Think MIC Is A Good Stock To Buy Now?
At third quarter's end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -32% from the second quarter of 2021. By comparison, 31 hedge funds held shares or bullish call options in MIC a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Farallon Capital was the largest shareholder of Macquarie Infrastructure Corporation (NYSE:MIC), with a stake worth $176.9 million reported as of the end of September. Trailing Farallon Capital was Ursa Fund Management, which amassed a stake valued at $101.5 million. Hudson Bay Capital Management, Arrowstreet Capital, and GAMCO Investors 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 Ursa Fund Management allocated the biggest weight to Macquarie Infrastructure Corporation (NYSE:MIC), around 36.15% of its 13F portfolio. Litespeed Management is also relatively very bullish on the stock, designating 2.63 percent of its 13F equity portfolio to MIC.
Since Macquarie Infrastructure Corporation (NYSE:MIC) has witnessed a decline in interest from hedge fund managers, logic holds that there were a few fund managers who were dropping their positions entirely by the end of the third quarter. Interestingly, Michael Cowley's Sandbar Asset Management dropped the biggest investment of the "upper crust" of funds monitored by Insider Monkey, worth about $67.3 million in stock. Nathaniel August's fund, Mangrove Partners, also sold off its stock, about $32.2 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 11 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Macquarie Infrastructure Corporation (NYSE:MIC) but similarly valued. These stocks are Academy Sports and Outdoors, Inc. (NASDAQ:ASO), Onto Innovation Inc. (NYSE:ONTO), The Macerich Company (NYSE:MAC), Dillard's, Inc. (NYSE:DDS), Lexington Realty Trust (NYSE:LXP), Lyell Immunopharma Inc. (NASDAQ:LYEL), and iHeartMedia, Inc. (NASDAQ:IHRT). This group of stocks' market caps are similar to MIC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASO,48,1213061,3 ONTO,21,270140,-4 MAC,10,99441,0 DDS,22,120218,4 LXP,15,251370,-1 LYEL,10,118788,-4 IHRT,28,617608,0 Average,22,384375,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $384 million. That figure was $542 million in MIC's case. Academy Sports and Outdoors, Inc. (NASDAQ:ASO) is the most popular stock in this table. On the other hand The Macerich Company (NYSE:MAC) is the least popular one with only 10 bullish hedge fund positions. Macquarie Infrastructure Corporation (NYSE:MIC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MIC is 21.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Hedge funds were also right about betting on MIC as the stock returned 1282% since the end of Q3 (through 12/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Get real-time email alerts: Follow Macquarie Infrastructure Corp (NYSE:MIC)
Disclosure: None. This article was originally published at Insider Monkey.