Do Hedge Funds Love MasTec, Inc. (MTZ)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards MasTec, Inc. (NYSE:MTZ).

MasTec, Inc. (NYSE:MTZ) was in 39 hedge funds’ portfolios at the end of June. The all time high for this statistic is 41. MTZ investors should pay attention to an increase in activity from the world’s largest hedge funds recently. There were 36 hedge funds in our database with MTZ holdings at the end of March. Our calculations also showed that MTZ isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

William Harnisch of Peconic Partners LLC

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. 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. 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. Now we’re going to take a look at the latest hedge fund action encompassing MasTec, Inc. (NYSE:MTZ).

Do Hedge Funds Think MTZ Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MTZ over the last 24 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jos Shaver’s Electron Capital Partners has the most valuable position in MasTec, Inc. (NYSE:MTZ), worth close to $72.6 million, amounting to 3.5% of its total 13F portfolio. Sitting at the No. 2 spot is Pzena Investment Management, led by Richard S. Pzena, holding a $70.1 million position; 0.3% of its 13F portfolio is allocated to the company. Some other peers that are bullish encompass Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and William Harnisch’s Peconic Partners LLC. In terms of the portfolio weights assigned to each position Billings Capital Management allocated the biggest weight to MasTec, Inc. (NYSE:MTZ), around 13.26% of its 13F portfolio. Coe Capital Management is also relatively very bullish on the stock, dishing out 3.78 percent of its 13F equity portfolio to MTZ.

As industrywide interest jumped, key money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, assembled the most outsized position in MasTec, Inc. (NYSE:MTZ). Citadel Investment Group had $30 million invested in the company at the end of the quarter. Eric F. Billings’s Billings Capital Management also initiated a $10.4 million position during the quarter. The following funds were also among the new MTZ investors: D. E. Shaw’s D E Shaw, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).

Let’s also examine hedge fund activity in other stocks similar to MasTec, Inc. (NYSE:MTZ). We will take a look at Lincoln Electric Holdings, Inc. (NASDAQ:LECO), New Fortress Energy Inc. (NASDAQ:NFE), Woodward Inc (NASDAQ:WWD), Globus Medical Inc (NYSE:GMED), Encompass Health Corporation (NYSE:EHC), Brunswick Corporation (NYSE:BC), and AngloGold Ashanti Limited (NYSE:AU). This group of stocks’ market valuations are similar to MTZ’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.4 hedge funds with bullish positions and the average amount invested in these stocks was $519 million. That figure was $403 million in MTZ’s case. Encompass Health Corporation (NYSE:EHC) is the most popular stock in this table. On the other hand New Fortress Energy Inc. (NASDAQ:NFE) is the least popular one with only 9 bullish hedge fund positions. MasTec, Inc. (NYSE:MTZ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTZ is 82. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately MTZ wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MTZ were disappointed as the stock returned -19.2% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.