Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 mid-cap stocks among the best performing hedge funds in our database yielded an average return of 18% during the last 12 months, outperforming the S&P 500 Index funds by double digits. Although the elite funds occasionally have their duds, such as SunEdison and Valeant, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Magna International Inc. (USA) (NYSE:MGA).
Is Magna International Inc. (USA) (NYSE:MGA) a buy, sell, or hold? Prominent investors are selling. The number of bullish hedge fund bets went down by 2 recently. MGA was in 27 hedge funds’ portfolios at the end of September. There were 29 hedge funds in our database with MGA holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as United Continental Holdings Inc (NYSE:UAL), CA, Inc. (NASDAQ:CA), and Verisk Analytics, Inc. (NASDAQ:VRSK) to gather more data points.
Follow Magna International Inc (NYSE:MGA)
Follow Magna International Inc (NYSE:MGA)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s review the fresh action regarding Magna International Inc. (USA) (NYSE:MGA).
What does the smart money think about Magna International Inc. (USA) (NYSE:MGA)?
Heading into the fourth quarter of 2016, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a fall of 7% from the second quarter of 2016. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, East Side Capital (RR Partners), managed by Steven Richman, holds the biggest position in Magna International Inc. (USA) (NYSE:MGA). East Side Capital (RR Partners) has a $94.5 million position in the stock, comprising 4.6% of its 13F portfolio. The second largest stake is held by Daniel Bubis of Tetrem Capital Management, with a $57.9 million position; 2.2% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism encompass Cliff Asness’ AQR Capital Management, Anand Parekh’s Alyeska Investment Group and D. E. Shaw’s D E Shaw.
Since Magna International Inc. (USA) (NYSE:MGA) has faced falling interest from hedge fund managers, it’s safe to say that there was a specific group of funds that slashed their positions entirely in the third quarter. At the top of the heap, Jacob Doft’s Highline Capital Management sold off the largest stake of the 700 funds watched by Insider Monkey, valued at close to $32.7 million in stock, and Gregg Moskowitz’s Interval Partners was right behind this move, as the fund said goodbye to about $17.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Magna International Inc. (USA) (NYSE:MGA). We will take a look at United Continental Holdings Inc (NYSE:UAL), CA, Inc. (NASDAQ:CA), Verisk Analytics, Inc. (NASDAQ:VRSK), and Potash Corp./Saskatchewan (USA) (NYSE:POT). This group of stocks’ market values resemble MGA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UAL | 63 | 3737163 | 6 |
| CA | 30 | 363061 | -1 |
| VRSK | 23 | 592297 | -2 |
| POT | 18 | 237545 | -14 |
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1.23 billion. That figure was $435 million in MGA’s case. United Continental Holdings Inc (NYSE:UAL) is the most popular stock in this table. On the other hand Potash Corp./Saskatchewan (USA) (NYSE:POT) is the least popular one with only 18 bullish hedge fund positions. Magna International Inc. (USA) (NYSE:MGA) 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. In this regard UAL might be a better candidate to consider a long position.
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