Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds.
Is Moog Inc (NYSE:MOG) going to take off soon? Investors who are in the know are in an optimistic mood. The number of bullish hedge fund positions inched up by 1 lately. Our calculations also showed that MOG isn’t among the 30 most popular stocks among hedge funds (view the video below). MOG was in 18 hedge funds’ portfolios at the end of the second quarter of 2019. There were 17 hedge funds in our database with MOG holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the fresh hedge fund action regarding Moog Inc (NYSE:MOG).
What does smart money think about Moog Inc (NYSE:MOG)?
At Q2’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in MOG a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, D E Shaw was the largest shareholder of Moog Inc (NYSE:MOG), with a stake worth $37.8 million reported as of the end of March. Trailing D E Shaw was Millennium Management, which amassed a stake valued at $19.2 million. AQR Capital Management, GAMCO Investors, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, key hedge funds have jumped into Moog Inc (NYSE:MOG) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most valuable position in Moog Inc (NYSE:MOG). Arrowstreet Capital had $6.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $4.6 million investment in the stock during the quarter. The following funds were also among the new MOG investors: John D. Gillespie’s Prospector Partners, Bruce Kovner’s Caxton Associates LP, and Michael Gelband’s ExodusPoint Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Moog Inc (NYSE:MOG) but similarly valued. We will take a look at Ormat Technologies, Inc. (NYSE:ORA), Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB), BridgeBio Pharma, Inc. (NASDAQ:BBIO), and MFA Financial, Inc. (NYSE:MFA). All of these stocks’ market caps resemble MOG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ORA | 9 | 169084 | 0 |
| HOMB | 13 | 25864 | -2 |
| BBIO | 14 | 1069073 | 14 |
| MFA | 17 | 103174 | 1 |
| Average | 13.25 | 341799 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $342 million. That figure was $119 million in MOG’s case. MFA Financial, Inc. (NYSE:MFA) is the most popular stock in this table. On the other hand Ormat Technologies, Inc. (NYSE:ORA) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Moog Inc (NYSE:MOG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MOG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MOG were disappointed as the stock returned -13.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
