Hedge Funds Are Piling Into Magnite Inc. (MGNI)

In this article we will check out the progression of hedge fund sentiment towards Magnite Inc. (NASDAQ:MGNI) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Magnite Inc. (NASDAQ:MGNI) investors should be aware of an increase in enthusiasm from smart money of late. Magnite Inc. (NASDAQ:MGNI) was in 29 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MGNI 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.

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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. With all of this in mind we’re going to go over the recent hedge fund action surrounding Magnite Inc. (NASDAQ:MGNI).

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

Heading into the third quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MGNI over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

More specifically, Citadel Investment Group was the largest shareholder of Magnite Inc. (NASDAQ:MGNI), with a stake worth $51 million reported as of the end of June. Trailing Citadel Investment Group was Renaissance Technologies, which amassed a stake valued at $38.2 million. Nine Ten Partners, Millennium Management, and Collaborative Holdings Management 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 Collaborative Holdings Management allocated the biggest weight to Magnite Inc. (NASDAQ:MGNI), around 10.28% of its 13F portfolio. P.A.W. CAPITAL PARTNERS is also relatively very bullish on the stock, dishing out 5.97 percent of its 13F equity portfolio to MGNI.

Now, key money managers have been driving this bullishness. Kettle Hill Capital Management, managed by Andrew Kurita, initiated the most valuable position in Magnite Inc. (NASDAQ:MGNI). Kettle Hill Capital Management had $11.3 million invested in the company at the end of the quarter. Benjamin Natter’s Kent Lake Capital also made a $10.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Grossman and Glen Schneider’s SG Capital Management, Brandon Haley’s Holocene Advisors, and Jim Roumell’s Roumell Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Magnite Inc. (NASDAQ:MGNI) but similarly valued. These stocks are LivePerson, Inc. (NASDAQ:LPSN), Allison Transmission Holdings Inc (NYSE:ALSN), Commscope Holding Company Inc (NASDAQ:COMM), Ryman Hospitality Properties, Inc. (NYSE:RHP), Certara, Inc. (NASDAQ:CERT), Advanced Energy Industries, Inc. (NASDAQ:AEIS), and Resideo Technologies, Inc. (NYSE:REZI). This group of stocks’ market values resemble MGNI’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $407 million. That figure was $261 million in MGNI’s case. Commscope Holding Company Inc (NASDAQ:COMM) is the most popular stock in this table. On the other hand Certara, Inc. (NASDAQ:CERT) is the least popular one with only 7 bullish hedge fund positions. Magnite Inc. (NASDAQ:MGNI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MGNI is 76.9. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately MGNI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MGNI were disappointed as the stock returned -11.8% since the end of June (through 10/15) 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.