Ferrari (NYSE:RACE) Will Burn Hedge Fund Managers

Ferrari (NYSE:RACE) Will Burn Hedge Fund Managers


Hedge fund managers often reap large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds are pretty secretive, but we can still get some insights by analyzing their Quarterly 13F SEC filings.

One of the best sectors for large returns is hedge funds’ most popular small-cap picks, which are not widely followed and may trade at a discount to their intrinsic value.

Here I check out hedge fund activity in Ferrari (NYSE:RACE).

The Big Q: Is Ferrari (NYSE:RACE) worth your attention now?

The best stock pickers are becoming less confident. The number of Bullish hedge fund positions fell by 1 in recent months.

The data shows that Ferrari is not among the 30 most popular stocks among hedge fund managers.

Ferrari was in 26 hedge funds’ portfolios at the end Q-3 of Y 2018. There were 27 hedge funds this we know of with Ferari positions at the end of Q-2 of Y 2018

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. This year that money is returning less than 5% overall according to the data that we have here at HeffX-LTN.

Our research has shown that hedge funds’ large-cap stock picks failed to beat the market between Y’s 1999 and 2016,

But, there is a group of hedge fund holdings that outperformed the market by 18% since May 2014 through 3 December 2018. We believe hedge fund sentiment is a useful indicator to pay attention to.

Now, looking at Ferrari aka RACE

At the end of Q-3, a total of 26 of the hedge funds tracked by were Bullish on the stock, a change of -4% from 1 Qearlier.

Below, see the change in hedge fund sentiment towards RACE over the last 13 Quarters.

Examining the hedge funds that were among the Top holders of the stock and which hedge funds were making big moves we learned that Darsana Capital Partners was the largest shareholder of Ferrari N.V. (NYSE:RACE), with a stake worth $332.9-M reported as of the end of September.

After Darsana Capital Partners was Melvin Capital Management, with a stake valued at $245.9-M.

Viking Global, Alatus Capital, and Marshall Wace LLP also like the stock, giving the stock large weights in their portfolios.

Now, judging by the fact that RACE has see declining sentiment from hedge fund managers, logic says that there is a sect of fund managers that decided to sell off their full holdings by the end of Q-3.

At the Top of that list is Arrowstreet Capital which sold off the biggest investment of all the funds we watch totaling an estimated $125.8-M in stock, and Mohnish Pabrai next, as the fund sold its small stake of about $54.2-M worth.

These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds by the end of Q-3.

The result of my analysis is that $1.31-B was invested in RACE, and that it is not the least popular stock in the Key group of stocks analyzed that hedge funds sold, but hedge fund interest is  below average.

This is a slightly negative signal, and so it Ferrari may now be a good time to consider a Long position in the world’s #1 stock in the automotive sector, The Aristocrat!

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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