Hedge Funds Intensely Selling MasTec, Inc. (MTZ)

In this article you are going to find out whether hedge funds think MasTec, Inc. (NYSE:MTZ) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

MasTec, Inc. (NYSE:MTZ) investors should be aware of a decrease in enthusiasm from smart money lately. MTZ was in 24 hedge funds’ portfolios at the end of March. There were 41 hedge funds in our database with MTZ positions at the end of the previous quarter. Our calculations also showed that MTZ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are a large number of indicators shareholders have at their disposal to grade their holdings. Two of the less utilized indicators are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the elite money managers can outperform the broader indices by a healthy amount (see the details here).

Noam Gottesman of GLG Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the latest hedge fund action surrounding MasTec, Inc. (NYSE:MTZ).

What have hedge funds been doing with MasTec, Inc. (NYSE:MTZ)?

At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -41% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in MTZ over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in MasTec, Inc. (NYSE:MTZ) was held by AQR Capital Management, which reported holding $39.4 million worth of stock at the end of September. It was followed by Alyeska Investment Group with a $12.6 million position. Other investors bullish on the company included Citadel Investment Group, Billings Capital Management, and Lodge Hill Capital. In terms of the portfolio weights assigned to each position Billings Capital Management allocated the biggest weight to MasTec, Inc. (NYSE:MTZ), around 15.44% of its 13F portfolio. Lodge Hill Capital is also relatively very bullish on the stock, designating 2.75 percent of its 13F equity portfolio to MTZ.

Since MasTec, Inc. (NYSE:MTZ) has faced a decline in interest from hedge fund managers, logic holds that there was a specific group of funds that elected to cut their entire stakes in the first quarter. Intriguingly, Alexander Mitchell’s Scopus Asset Management said goodbye to the largest position of the 750 funds tracked by Insider Monkey, comprising an estimated $20.6 million in stock. Noam Gottesman’s fund, GLG Partners, also sold off its stock, about $14.6 million worth. These transactions are interesting, as total hedge fund interest fell by 17 funds in the first quarter.

Let’s now review hedge fund activity in other stocks similar to MasTec, Inc. (NYSE:MTZ). These stocks are AutoNation, Inc. (NYSE:AN), Avnet, Inc. (NYSE:AVT), Werner Enterprises, Inc. (NASDAQ:WERN), and Cenovus Energy Inc (NYSE:CVE). This group of stocks’ market valuations match MTZ’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $244 million. That figure was $100 million in MTZ’s case. AutoNation, Inc. (NYSE:AN) is the most popular stock in this table. On the other hand Werner Enterprises, Inc. (NASDAQ:WERN) is the least popular one with only 17 bullish hedge fund positions. MasTec, Inc. (NYSE:MTZ) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on MTZ as the stock returned 27.9% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.