Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: MYR Group Inc (NASDAQ:MYRG).
MYR Group Inc (NASDAQ:MYRG) was in 15 hedge funds’ portfolios at the end of the first quarter of 2019. MYRG shareholders have witnessed an increase in support from the world’s most elite money managers recently. There were 12 hedge funds in our database with MYRG positions at the end of the previous quarter. Our calculations also showed that MYRG isn’t among the 30 most popular stocks among hedge funds.
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.
Let’s take a peek at the new hedge fund action regarding MYR Group Inc (NASDAQ:MYRG).
Hedge fund activity in MYR Group Inc (NASDAQ:MYRG)
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MYRG over the last 15 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Third Avenue Management was the largest shareholder of MYR Group Inc (NASDAQ:MYRG), with a stake worth $10.8 million reported as of the end of March. Trailing Third Avenue Management was Millennium Management, which amassed a stake valued at $2.8 million. Marshall Wace LLP, AQR Capital Management, and Fisher Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, specific money managers have jumped into MYR Group Inc (NASDAQ:MYRG) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the biggest position in MYR Group Inc (NASDAQ:MYRG). Marshall Wace LLP had $2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $1.5 million position during the quarter. The only other fund with a brand new MYRG position is Chuck Royce’s Royce & Associates.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as MYR Group Inc (NASDAQ:MYRG) but similarly valued. These stocks are TPG Pace Holdings Corp. (NYSE:TPGH), istar Inc (NYSE:STAR), Barrett Business Services, Inc. (NASDAQ:BBSI), and MeiraGTx Holdings plc (NASDAQ:MGTX). This group of stocks’ market valuations match MYRG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TPGH | 18 | 196754 | 1 |
| STAR | 9 | 49070 | 1 |
| BBSI | 13 | 87338 | 0 |
| MGTX | 11 | 170238 | 4 |
| Average | 12.75 | 125850 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $28 million in MYRG’s case. TPG Pace Holdings Corp. (NYSE:TPGH) is the most popular stock in this table. On the other hand istar Inc (NYSE:STAR) is the least popular one with only 9 bullish hedge fund positions. MYR Group Inc (NASDAQ:MYRG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately MYRG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MYRG were disappointed as the stock returned 2.3% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
