The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Moog Inc (NYSE:MOG-A), and what that likely means for the prospects of the company and its stock.
Is Moog Inc (NYSE:MOG-A) a buy, sell, or hold? The smart money is turning bullish. The number of bullish hedge fund bets inched up by 3 lately. At the end of this article we will also compare MOG to other stocks including TerraForm Power Inc (NASDAQ:TERP), Cabot Corp (NYSE:CBT), and Belden Inc. (NYSE:BDC) to get a better sense of its popularity.
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To most market participants, hedge funds are assumed to be underperforming, outdated investment tools of years past. While there are greater than 8000 funds with their doors open at present, Our experts hone in on the masters of this club, around 700 funds. These investment experts shepherd most of all hedge funds’ total asset base, and by tracking their first-class equity investments, Insider Monkey has determined a few investment strategies that have historically surpassed the broader indices. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
With all of this in mind, we’re going to take a look at the latest action encompassing Moog Inc (NYSE:MOG-A).
What does the smart money think about Moog Inc (NYSE:MOG-A)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Gotham Asset Management, managed by Joel Greenblatt, holds the largest position in Moog Inc (NYSE:MOG-A). Gotham Asset Management has a $20.5 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Jim Simons of Renaissance Technologies, with a $12.4 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism encompass Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and D E Shaw.
Now, specific money managers have jumped into Moog Inc (NYSE:MOG-A) headfirst. PDT Partners, managed by Peter Muller, created the most outsized position in Moog Inc (NYSE:MOG-A). PDT Partners had $1.1 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also initiated a $0.4 million position during the quarter. The following funds were also among the new MOG investors: Ken Gray and Steve Walsh’s Bryn Mawr Capital, Ken Griffin’s Citadel Investment Group, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Moog Inc (NYSE:MOG-A) but similarly valued. These stocks are TerraForm Power Inc (NASDAQ:TERP), Cabot Corp (NYSE:CBT), Belden Inc. (NYSE:BDC), and Corporate Office Properties Trust (NYSE:OFC). This group of stocks’ market valuations match MOG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TERP | 31 | 476639 | -15 |
| CBT | 28 | 145775 | -1 |
| BDC | 22 | 106931 | 9 |
| OFC | 16 | 99669 | -2 |
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $207 million. That figure was $75 million in MOG’s case. TerraForm Power Inc (NASDAQ:TERP) is the most popular stock in this table. On the other hand Corporate Office Properties Trust (NYSE:OFC) is the least popular one with only 16 bullish hedge fund positions. Moog Inc (NYSE:MOG-A) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TERP might be a better candidate to consider a long position.
