The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Motorsport Games Inc. (NASDAQ:MSGM).
Is Motorsport Games Inc. (NASDAQ:MSGM) a buy right now? The best stock pickers were taking a bullish view. The number of long hedge fund bets improved by 6 lately. Motorsport Games Inc. (NASDAQ:MSGM) was in 6 hedge funds’ portfolios at the end of March. Our calculations also showed that MSGM 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.
Stuart Zimmer of Zimmer Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 go over the recent hedge fund action surrounding Motorsport Games Inc. (NASDAQ:MSGM).
Do Hedge Funds Think MSGM Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6 from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in MSGM a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Driehaus Capital was the largest shareholder of Motorsport Games Inc. (NASDAQ:MSGM), with a stake worth $6.6 million reported as of the end of March. Trailing Driehaus Capital was Royce & Associates, which amassed a stake valued at $3 million. Alyeska Investment Group, Millennium Management, and Zimmer Partners 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 Driehaus Capital allocated the biggest weight to Motorsport Games Inc. (NASDAQ:MSGM), around 0.1% of its 13F portfolio. Alyeska Investment Group is also relatively very bullish on the stock, designating 0.04 percent of its 13F equity portfolio to MSGM.
As aggregate interest increased, key money managers were leading the bulls’ herd. Driehaus Capital, managed by Richard Driehaus, initiated the biggest position in Motorsport Games Inc. (NASDAQ:MSGM). Driehaus Capital had $6.6 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also initiated a $3 million position during the quarter. The other funds with new positions in the stock are Anand Parekh’s Alyeska Investment Group, Israel Englander’s Millennium Management, and Stuart J. Zimmer’s Zimmer Partners.
Let’s check out hedge fund activity in other stocks similar to Motorsport Games Inc. (NASDAQ:MSGM). We will take a look at Luokung Technology Corp (NASDAQ:LKCO), Hersha Hospitality Trust (NYSE:HT), Turtle Beach Corp (NASDAQ:HEAR), Clearfield, Inc. (NASDAQ:CLFD), Whitestone REIT (NYSE:WSR), Sierra Bancorp (NASDAQ:BSRR), and NexImmune, Inc. (NASDAQ:NEXI). This group of stocks’ market values match MSGM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LKCO | 1 | 118 | -1 |
| HT | 12 | 16864 | -2 |
| HEAR | 20 | 68274 | 6 |
| CLFD | 7 | 33133 | -1 |
| WSR | 7 | 12971 | -3 |
| BSRR | 6 | 13602 | -3 |
| NEXI | 12 | 59288 | 12 |
| Average | 9.3 | 29179 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $14 million in MSGM’s case. Turtle Beach Corp (NASDAQ:HEAR) is the most popular stock in this table. On the other hand Luokung Technology Corp (NASDAQ:LKCO) is the least popular one with only 1 bullish hedge fund positions. Motorsport Games Inc. (NASDAQ:MSGM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MSGM is 31.1. 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 negative signal and 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately MSGM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MSGM investors were disappointed as the stock returned -41.7% since the end of March (through 6/25) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.