Is MKS Instruments, Inc. (MKSI) A Good Stock To Buy?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards MKS Instruments, Inc. (NASDAQ:MKSI).

Is MKSI a good stock to buy now? The smart money was in a bullish mood. The number of bullish hedge fund bets advanced by 2 in recent months. MKS Instruments, Inc. (NASDAQ:MKSI) was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that MKSI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 26 hedge funds in our database with MKSI positions at the end of the second quarter.

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. Keeping this in mind let’s go over the new hedge fund action surrounding MKS Instruments, Inc. (NASDAQ:MKSI).

Chuck Royce of Royce & Associates

Do Hedge Funds Think MKSI Is A Good Stock To Buy Now?

At third quarter’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MKSI over the last 25 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, Royce & Associates held the most valuable stake in MKS Instruments, Inc. (NASDAQ:MKSI), which was worth $132.2 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $80.7 million worth of shares. Value Holdings LP, Renaissance Technologies, and Polar Capital 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 Value Holdings LP allocated the biggest weight to MKS Instruments, Inc. (NASDAQ:MKSI), around 10.41% of its 13F portfolio. Provenire Capital is also relatively very bullish on the stock, earmarking 3.31 percent of its 13F equity portfolio to MKSI.

As one would reasonably expect, specific money managers have jumped into MKS Instruments, Inc. (NASDAQ:MKSI) headfirst. Renaissance Technologies, established the most outsized position in MKS Instruments, Inc. (NASDAQ:MKSI). Renaissance Technologies had $25.5 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also initiated a $23.2 million position during the quarter. The following funds were also among the new MKSI investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Benjamin A. Smith’s Laurion Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as MKS Instruments, Inc. (NASDAQ:MKSI) but similarly valued. These stocks are SEI Investments Company (NASDAQ:SEIC), DigitalOcean Holdings, Inc. (NYSE:DOCN), BanColombia S.A. (NYSE:CIB), Mobile TeleSystems Public Joint Stock Company (NYSE:MBT), Organon & Co. (NYSE:OGN), Ternium S.A. (NYSE:TX), and United Therapeutics Corporation (NASDAQ:UTHR). This group of stocks’ market values resemble MKSI’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $595 million. That figure was $425 million in MKSI’s case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 3 bullish hedge fund positions. MKS Instruments, Inc. (NASDAQ:MKSI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MKSI is 56.5. 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. 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 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately MKSI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MKSI were disappointed as the stock returned 6.9% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.