The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of McAfee Corp. (NASDAQ:MCFE).
Is MCFE a good stock to buy? McAfee Corp. (NASDAQ:MCFE) was in 17 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 20. MCFE has experienced a decrease in enthusiasm from smart money lately. There were 20 hedge funds in our database with MCFE holdings at the end of December. Our calculations also showed that MCFE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to check out the fresh hedge fund action regarding McAfee Corp. (NASDAQ:MCFE).
Do Hedge Funds Think MCFE Is A Good Stock To Buy Now?
At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the fourth quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in MCFE a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Park West Asset Management was the largest shareholder of McAfee Corp. (NASDAQ:MCFE), with a stake worth $49.3 million reported as of the end of March. Trailing Park West Asset Management was Jericho Capital Asset Management, which amassed a stake valued at $31.8 million. Indaba Capital Management, Arrowstreet Capital, and NWI 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 Indaba Capital Management allocated the biggest weight to McAfee Corp. (NASDAQ:MCFE), around 2.55% of its 13F portfolio. Park West Asset Management is also relatively very bullish on the stock, setting aside 1.49 percent of its 13F equity portfolio to MCFE.
Due to the fact that McAfee Corp. (NASDAQ:MCFE) has faced a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedgies that elected to cut their entire stakes heading into Q2. Intriguingly, Andreas Halvorsen’s Viking Global cut the biggest investment of the 750 funds monitored by Insider Monkey, totaling close to $87.6 million in stock. Stuart J. Zimmer’s fund, Zimmer Partners, also dumped its stock, about $33.5 million worth. These moves are important to note, as total hedge fund interest fell by 3 funds heading into Q2.
Let’s now review hedge fund activity in other stocks similar to McAfee Corp. (NASDAQ:MCFE). We will take a look at ContextLogic Inc. (NASDAQ:WISH), Bruker Corporation (NASDAQ:BRKR), Arrival (NASDAQ:ARVL), CF Industries Holdings, Inc. (NYSE:CF), Americold Realty Trust (NYSE:COLD), Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF), and Reliance Steel & Aluminum Co. (NYSE:RS). This group of stocks’ market valuations match MCFE’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $436 million. That figure was $175 million in MCFE’s case. CF Industries Holdings, Inc. (NYSE:CF) is the most popular stock in this table. On the other hand Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is the least popular one with only 10 bullish hedge fund positions. McAfee Corp. (NASDAQ:MCFE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MCFE is 37.8. 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 28.5% in 2021 through July 23rd and beat the market by 10.1 percentage points. A small number of hedge funds were also right about betting on MCFE, though not to the same extent, as the stock returned 18.3% since the end of Q1 (through July 23rd) and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.