Is MKS Instruments, Inc. (MKSI) Going to Burn These Hedge Funds?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of MKS Instruments, Inc. (NASDAQ:MKSI) based on that data.

MKS Instruments, Inc. (NASDAQ:MKSI) investors should be aware of an increase in hedge fund sentiment recently. MKS Instruments, Inc. (NASDAQ:MKSI) was in 26 hedge funds’ portfolios at the end of June. 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 Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Tudor Jones of Tudor Investment Corp

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a look at the latest hedge fund action encompassing MKS Instruments, Inc. (NASDAQ:MKSI).

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

At Q2’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from the first quarter of 2020. On the other hand, there were a total of 32 hedge funds with a bullish position in MKSI a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Royce & Associates was the largest shareholder of MKS Instruments, Inc. (NASDAQ:MKSI), with a stake worth $138.7 million reported as of the end of June. Trailing Royce & Associates was Fisher Asset Management, which amassed a stake valued at $93.6 million. Value Holdings LP, Millennium Management, and AQR Capital Management 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 12.24% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.95 percent of its 13F equity portfolio to MKSI.

As one would reasonably expect, key hedge funds have jumped into MKS Instruments, Inc. (NASDAQ:MKSI) headfirst. Tudor Investment Corp, managed by Paul Tudor Jones, initiated the biggest position in MKS Instruments, Inc. (NASDAQ:MKSI). Tudor Investment Corp had $4.6 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $2.9 million position during the quarter. The other funds with brand new MKSI positions are Jinghua Yan’s TwinBeech Capital, Mika Toikka’s AlphaCrest Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to MKS Instruments, Inc. (NASDAQ:MKSI). These stocks are AGCO Corporation (NYSE:AGCO), Globe Life Inc. (NYSE:GL), Playtika Holding Corp. (NASDAQ:PLTK), Appian Corporation (NASDAQ:APPN), Sasol Limited (NYSE:SSL), UGI Corp (NYSE:UGI), and Credicorp Ltd. (NYSE:BAP). This group of stocks’ market caps are similar to MKSI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $448 million. That figure was $423 million in MKSI’s case. AGCO Corporation (NYSE:AGCO) is the most popular stock in this table. On the other hand Sasol Limited (NYSE:SSL) is the least popular one with only 5 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 63.1. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 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 -18.6% since the end of June (through 10/15) 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.