Does McGrath RentCorp (NASDAQ:MGRC) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Is McGrath RentCorp (NASDAQ:MGRC) a buy, sell, or hold? The best stock pickers are becoming less confident. The number of bullish hedge fund positions were trimmed by 1 recently. Our calculations also showed that MGRC isn’t among the 30 most popular stocks among hedge funds. MGRC was in 22 hedge funds’ portfolios at the end of March. There were 23 hedge funds in our database with MGRC holdings at the end of the previous quarter.
In the 21st century investor’s toolkit there are plenty of gauges market participants have at their disposal to appraise publicly traded companies. A couple of the less utilized gauges are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the broader indices by a superb margin (see the details here).
Let’s take a look at the recent hedge fund action regarding McGrath RentCorp (NASDAQ:MGRC).
Hedge fund activity in McGrath RentCorp (NASDAQ:MGRC)
At Q1’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MGRC over the last 15 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in McGrath RentCorp (NASDAQ:MGRC), which was worth $32.9 million at the end of the first quarter. On the second spot was Headlands Capital which amassed $16.5 million worth of shares. Moreover, Royce & Associates, SG Capital Management, and AQR Capital Management were also bullish on McGrath RentCorp (NASDAQ:MGRC), allocating a large percentage of their portfolios to this stock.
Due to the fact that McGrath RentCorp (NASDAQ:MGRC) has witnessed bearish sentiment from hedge fund managers, logic holds that there were a few fund managers that slashed their full holdings heading into Q3. Intriguingly, David Costen Haley’s HBK Investments said goodbye to the biggest stake of the 700 funds followed by Insider Monkey, valued at about $0.4 million in stock. Brandon Haley’s fund, Holocene Advisors, also dumped its stock, about $0.4 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds heading into Q3.
Let’s now review hedge fund activity in other stocks similar to McGrath RentCorp (NASDAQ:MGRC). These stocks are Synaptics Incorporated (NASDAQ:SYNA), S & T Bancorp Inc (NASDAQ:STBA), Air Transport Services Group Inc. (NASDAQ:ATSG), and First Busey Corporation (NASDAQ:BUSE). This group of stocks’ market caps resemble MGRC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYNA | 21 | 138905 | 6 |
| STBA | 4 | 4440 | -4 |
| ATSG | 18 | 209338 | 5 |
| BUSE | 13 | 34678 | 1 |
| Average | 14 | 96840 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $136 million in MGRC’s case. Synaptics Incorporated (NASDAQ:SYNA) is the most popular stock in this table. On the other hand S & T Bancorp Inc (NASDAQ:STBA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks McGrath RentCorp (NASDAQ:MGRC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on MGRC, though not to the same extent, as the stock returned 1.3% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
