It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory winners by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns arent usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Indexs returns in recent years), more than 50% of the constituents of the Standard and Poors 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that youd fail to beat the market. At the same time, the 15 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated a return of 19.7% during the first 2.5 months of 2019 (vs. 13.1% gain for SPY), with 93% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. Thats why we are going to go over recent hedge fund activity in Coty Inc (NYSE:COTY).
IsCoty Inc (NYSE:COTY)going to take off soon? The smart money is becoming less confident. The number of long hedge fund bets dropped by 5 in recent months. Our calculations also showed that COTY isnt among the30 most popular stocks among hedge funds.
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 Monkeys flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). Thats why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Were going to review the new hedge fund action regarding Coty Inc (NYSE:COTY).
At the end of the fourth quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in COTY over the last 14 quarters. So, lets examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Marc Lisker, Glenn Fuhrman and John PhelansMSDC Managementhas the largest position in Coty Inc (NYSE:COTY), worth close to $44.3 million, comprising 4.8% of its total 13F portfolio. The second most bullish fund manager is Ric Dillon ofDiamond Hill Capital, with a $27 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism comprise Ken GriffinsCitadel Investment Group, James DinansYork Capital Managementand Peter MullersPDT Partners.
Because Coty Inc (NYSE:COTY) has experienced a decline in interest from the smart money, its safe to say that there was a specific group of hedge funds that decided to sell off their full holdings by the end of the third quarter. Its worth mentioning that Guy ShaharsDSAM Partnerscut the biggest stake of the 700 funds watched by Insider Monkey, totaling close to $12.6 million in stock. Steve Cohens fund,Point72 Asset Management, also dropped its stock, about $10.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 5 funds by the end of the third quarter.
Lets also examine hedge fund activity in other stocks – not necessarily in the same industry as Coty Inc (NYSE:COTY) but similarly valued. These stocks are Momo Inc (NASDAQ:MOMO), JetBlue Airways Corporation (NASDAQ:JBLU), CAE, Inc. (NYSE:CAE), and Virtu Financial Inc (NASDAQ:VIRT). All of these stocks market caps are similar to COTYs market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MOMO,21,521092,-24 JBLU,31,623972,1 CAE,9,84941,-1 VIRT,17,114979,3 Average,19.5,336246,-5.25 [/table]
View table hereif you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $336 million. That figure was $132 million in COTYs case. JetBlue Airways Corporation (NASDAQ:JBLU) is the most popular stock in this table. On the other hand CAE, Inc. (NYSE:CAE) is the least popular one with only 9 bullish hedge fund positions. Coty Inc (NYSE:COTY) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed thattop 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on COTY as the stock returned 73% and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published atInsider Monkey.
Did Hedge Funds Drop The Ball On Caesars Entertainment Corp (CZR) ?
Should You Buy The Goodyear Tire & Rubber Company (GT)?
Do Hedge Funds Love Huntsman Corporation (HUN)?
Did Hedge Funds Drop The Ball On Knight-Swift Transportation Holdings Inc. (KNX) ?
Were Hedge Funds Right About Flocking Into Amarin Corporation plc (AMRN) ?
Why millennials would rather buy lottery tickets than invest in the stock market
Public defender asks to drop Florida school massacre suspect
$1.5 trillion student debt crisis: Many borrowers still dont understand the costs
Hedge Funds Have Never Been This Bullish On Algonquin Power & Utilities Corp. (AQN)
Facebook stock pops after Q1 earnings beat: Tech
Disney+ has a secret weapon: millennial nostalgia
Walmart creates Angus beef supply chain, cutting out meat processors
Poll: Americans split on college admissions fairness
Did Changing Sentiment Drive BioTimes (NYSEMKT:BTX) Share Price Down A Worrying 58%?
Mario Gabelli on Tesla, big tech, and Warren Buffett
7 Items You Should Be Buying at Aldi to Save Money, According to a Bargain Shopping Expert
Elon Musk: Tesla will offer compelling insurance product within a month
Tesla misses first-quarter expectations, reaffirms delivery guidance
Xilinx Earnings Miss Wall Streets Target, Stock Tanks Late
Tesla promises return to profit in third-quarter after large loss, may raise more capital
Microsoft beats earnings expectations, stock jumps
Disney isnt the only company paying its CEO 1,000 times more than its typical employee earnshere are 12 others
FTSE 100 slumps as oil price boost fades; KCOM jumps on buyout bid
Heres What to Expect from Amazons (AMZN) Q1 2019 Earnings Results
Amazon, Intel, Starbucks report What to know in markets Thursday
Trump Tax Returns Request Raises Serious Constitutional Questions, Mnuchin Says
Early Lyft investor explains why Ubers IPO could trigger a Lyft relief rally
Pete Buttigieg: The U.S. Doesnt Have the Leadership to Reform Immigration