We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Magna International Inc. (NYSE:MGA).
Magna International Inc. (NYSE:MGA) has seen an increase in hedge fund sentiment in recent months. Our calculations also showed that MGA 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.
According to most stock holders, hedge funds are assumed to be underperforming, old investment vehicles of yesteryear. While there are more than 8000 funds in operation at present, Our experts look at the bigwigs of this group, about 750 funds. These money managers handle the majority of the hedge fund industry’s total asset base, and by paying attention to their best investments, Insider Monkey has discovered a few investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Noam Gottesman of GLG Partners
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. Let’s go over the new hedge fund action surrounding Magna International Inc. (NYSE:MGA).
How have hedgies been trading Magna International Inc. (NYSE:MGA)?
At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MGA over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in Magna International Inc. (NYSE:MGA), which was worth $287.4 million at the end of the third quarter. On the second spot was RR Partners which amassed $53.5 million worth of shares. D E Shaw, Two Sigma Advisors, and GLG Partners 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 RR Partners allocated the biggest weight to Magna International Inc. (NYSE:MGA), around 5.97% of its 13F portfolio. Elm Ridge Capital is also relatively very bullish on the stock, setting aside 2.5 percent of its 13F equity portfolio to MGA.
Now, specific money managers have jumped into Magna International Inc. (NYSE:MGA) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, created the most valuable position in Magna International Inc. (NYSE:MGA). Adage Capital Management had $10.7 million invested in the company at the end of the quarter. David E. Shaw’s D E Shaw also made a $2.5 million investment in the stock during the quarter. The following funds were also among the new MGA investors: Paul Marshall and Ian Wace’s Marshall Wace and Matthew Tewksbury’s Stevens Capital Management.
Let’s now review hedge fund activity in other stocks similar to Magna International Inc. (NYSE:MGA). We will take a look at Marvell Technology Group Ltd. (NASDAQ:MRVL), Credicorp Ltd. (NYSE:BAP), Halliburton Company (NYSE:HAL), and International Paper Company (NYSE:IP). This group of stocks’ market caps resemble MGA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRVL | 31 | 682428 | -6 |
| BAP | 22 | 655780 | 2 |
| HAL | 31 | 817394 | -2 |
| IP | 27 | 273248 | -4 |
| Average | 27.75 | 607213 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $607 million. That figure was $432 million in MGA’s case. Marvell Technology Group Ltd. (NASDAQ:MRVL) is the most popular stock in this table. On the other hand Credicorp Ltd. (NYSE:BAP) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Magna International Inc. (NYSE:MGA) is even less popular than BAP. Hedge funds dodged a bullet by taking a bearish stance towards MGA. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MGA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MGA investors were disappointed as the stock returned 3.9% during the fourth quarter (through the end of November) 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 so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
