The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May and August as this time China pivoted and Trump put more pressure on China by increasing tariffs. Fourth quarter brought optimism to the markets and hedge funds’ top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 37.4% through the end of November, vs. a gain of 27.5% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards MiX Telematics Limited (NYSE:MIXT), and what that likely means for the prospects of the company and its stock.
MiX Telematics Limited (NYSE:MIXT) has seen an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that MIXT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the latest hedge fund action surrounding MiX Telematics Limited (NYSE:MIXT).
How are hedge funds trading MiX Telematics Limited (NYSE:MIXT)?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the second quarter of 2019. On the other hand, there were a total of 6 hedge funds with a bullish position in MIXT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of MiX Telematics Limited (NYSE:MIXT), with a stake worth $10.1 million reported as of the end of September. Trailing Renaissance Technologies was G2 Investment Partners Management, which amassed a stake valued at $8.1 million. Polar Capital, Bandera Partners, and Millennium 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 G2 Investment Partners Management allocated the biggest weight to MiX Telematics Limited (NYSE:MIXT), around 2.29% of its 13F portfolio. Bandera Partners is also relatively very bullish on the stock, dishing out 1.49 percent of its 13F equity portfolio to MIXT.
Now, key money managers have been driving this bullishness. Bandera Partners, managed by Gregory Bylinsky and Jefferson Gramm, created the biggest position in MiX Telematics Limited (NYSE:MIXT). Bandera Partners had $2.4 million invested in the company at the end of the quarter. Mark Broach’s Manatuck Hill Partners also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Will Graves’s Boardman Bay Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as MiX Telematics Limited (NYSE:MIXT) but similarly valued. We will take a look at Endeavour Silver Corp. (NYSE:EXK), Nordic American Tanker Limited (NYSE:NAT), Graf Industrial Corp. (NYSE:GRAF), and Tribune Publishing Company (NASDAQ:TPCO). This group of stocks’ market values are similar to MIXT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXK | 5 | 16777 | -1 |
| NAT | 9 | 6253 | 0 |
| GRAF | 12 | 53730 | 0 |
| TPCO | 15 | 14906 | 2 |
| Average | 10.25 | 22917 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $28 million in MIXT’s case. Tribune Publishing Company (NASDAQ:TPCO) is the most popular stock in this table. On the other hand Endeavour Silver Corp. (NYSE:EXK) is the least popular one with only 5 bullish hedge fund positions. MiX Telematics Limited (NYSE:MIXT) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MIXT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MIXT investors were disappointed as the stock returned -12.4% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
