Hedge Funds Are Dumping Magna International Inc. (MGA)

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter of 2021. One of these stocks was Magna International Inc. (NYSE:MGA).

Is Magna International Inc. (NYSE:MGA) an outstanding investment right now? The smart money was reducing their bets on the stock. The number of bullish hedge fund positions were cut by 10 in recent months. Magna International Inc. (NYSE:MGA) was in 29 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 43. Our calculations also showed that MGA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 39 hedge funds in our database with MGA positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to analyze the fresh hedge fund action encompassing Magna International Inc. (NYSE:MGA).

Cathie Wood of ARK Investment Management

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

At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -26% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MGA over the last 25 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the biggest position in Magna International Inc. (NYSE:MGA), worth close to $128.6 million, accounting for 0.2% of its total 13F portfolio. The second most bullish fund manager is Moore Global Investments, managed by Louis Bacon, which holds a $71.6 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass Catherine D. Wood’s ARK Investment Management, Steve Cohen’s Point72 Asset Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Heathbridge Capital Management allocated the biggest weight to Magna International Inc. (NYSE:MGA), around 3.74% of its 13F portfolio. Elm Ridge Capital is also relatively very bullish on the stock, dishing out 1.16 percent of its 13F equity portfolio to MGA.

Because Magna International Inc. (NYSE:MGA) has faced falling interest from the smart money, it’s safe to say that there were a few fund managers who were dropping their positions entirely in the third quarter. At the top of the heap, Mike Masters’s Masters Capital Management dropped the largest investment of the 750 funds monitored by Insider Monkey, worth an estimated $46.3 million in stock. Steven Richman’s fund, East Side Capital (RR Partners), also said goodbye to its stock, about $45.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 10 funds in the third quarter.

Let’s now review hedge fund activity in other stocks similar to Magna International Inc. (NYSE:MGA). We will take a look at CNH Industrial NV (NYSE:CNHI), Extra Space Storage, Inc. (NYSE:EXR), Northern Trust Corporation (NASDAQ:NTRS), XP Inc. (NASDAQ:XP), Vulcan Materials Company (NYSE:VMC), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), and Dover Corporation (NYSE:DOV). This group of stocks’ market caps are closest to MGA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.7 hedge funds with bullish positions and the average amount invested in these stocks was $833 million. That figure was $445 million in MGA’s case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand CNH Industrial NV (NYSE:CNHI) is the least popular one with only 25 bullish hedge fund positions. Magna International Inc. (NYSE:MGA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MGA is 26.3. 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately MGA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MGA investors were disappointed as the stock returned 0.5% since the end of September (through 11/30) 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.