A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30th, so let’s proceed with the discussion of the hedge fund sentiment on Mercury Systems Inc (NASDAQ:MRCY).
Is MRCY a good stock to buy? Mercury Systems Inc (NASDAQ:MRCY) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 26. MRCY shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. There were 11 hedge funds in our database with MRCY holdings at the end of June. Our calculations also showed that MRCY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a look at the latest hedge fund action encompassing Mercury Systems Inc (NASDAQ:MRCY).
Do Hedge Funds Think MRCY Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 91% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in MRCY over the last 25 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, D E Shaw was the largest shareholder of Mercury Systems Inc (NASDAQ:MRCY), with a stake worth $42.9 million reported as of the end of September. Trailing D E Shaw was Citadel Investment Group, which amassed a stake valued at $16.9 million. AQR Capital Management, Millennium Management, and Marshall Wace LLP 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 Quantamental Technologies allocated the biggest weight to Mercury Systems Inc (NASDAQ:MRCY), around 0.17% of its 13F portfolio. Value Holdings LP is also relatively very bullish on the stock, designating 0.11 percent of its 13F equity portfolio to MRCY.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Tudor Investment Corp, managed by Paul Tudor Jones, established the biggest position in Mercury Systems Inc (NASDAQ:MRCY). Tudor Investment Corp had $3 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $1.7 million position during the quarter. The other funds with brand new MRCY positions are Peter Algert’s Algert Global, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Michael Gelband’s ExodusPoint Capital.
Let’s check out hedge fund activity in other stocks similar to Mercury Systems Inc (NASDAQ:MRCY). These stocks are Trinity Industries, Inc. (NYSE:TRN), Emergent Biosolutions Inc (NYSE:EBS), Flagstar Bancorp Inc (NYSE:FBC), Gentherm Inc (NASDAQ:THRM), Crescent Point Energy Corp (NYSE:CPG), Lithium Americas Corp. (NYSE:LAC), and Covanta Holding Corporation (NYSE:CVA). All of these stocks’ market caps are closest to MRCY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRN | 17 | 649277 | -3 |
| EBS | 16 | 82732 | 1 |
| FBC | 25 | 296204 | 0 |
| THRM | 18 | 165695 | 0 |
| CPG | 11 | 108975 | -2 |
| LAC | 12 | 94159 | 3 |
| CVA | 23 | 437193 | -3 |
| Average | 17.4 | 262034 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $262 million. That figure was $113 million in MRCY’s case. Flagstar Bancorp Inc (NYSE:FBC) is the most popular stock in this table. On the other hand Crescent Point Energy Corp (NYSE:CPG) is the least popular one with only 11 bullish hedge fund positions. Mercury Systems Inc (NASDAQ:MRCY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRCY is 69.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on MRCY as the stock returned 16.1% since the end of Q3 (through 12/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
