Is MYR Group Inc (MYRG) A Good Investment?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in MYR Group Inc (NASDAQ:MYRG).

MYR Group Inc (NASDAQ:MYRG) shareholders have witnessed an increase in enthusiasm from smart money in recent months. 16 hedge funds that we track were long the stock on September 30. There were 13 hedge funds in our database with MYRG holdings at the end of the previous quarter. At the end of this article we will also compare MYRG to other stocks including El Pollo LoCo Holdings Inc (NASDAQ:LOCO), WMIH Corp (OTCMKTS:WMIH), and Lion Biotechnologies Inc (NASDAQ:LBIO) to get a better sense of its popularity.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

chungking/Shutterstock.com

What have hedge funds been doing with MYR Group Inc (NASDAQ:MYRG)?

At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a 23% boost from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MYRG over the last 5 quarters, which has alternated between rises and falls in ownership. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in MYR Group Inc (NASDAQ:MYRG), worth close to $11.5 million. The second most bullish fund manager is Levin Capital Strategies, led by John A. Levin, which holds a $7.9 million position. Some other peers with similar optimism contain Cliff Asness’ AQR Capital Management, Renaissance Technologies, one of the largest hedge funds in the world, and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now, key money managers were leading the bulls’ herd. Stevens Capital Management, led by Matthew Tewksbury, initiated the most valuable position in MYR Group Inc (NASDAQ:MYRG). Stevens Capital Management had $0.5 million invested in the company at the end of the quarter. Mike Vranos’ Ellington also made a $0.4 million investment in the stock during the quarter. The following funds were also among the new MYRG investors: John Fichthorn’s Dialectic Capital Management and Joshua Packwood and Schuster Tanger’s Radix Partners.

Let’s now review hedge fund activity in other stocks similar to MYR Group Inc (NASDAQ:MYRG). We will take a look at El Pollo LoCo Holdings Inc (NASDAQ:LOCO), WMIH Corp (OTCMKTS:WMIH), Lion Biotechnologies Inc (NASDAQ:LBIO), and ReTailMeNot Inc (NASDAQ:SALE). This group of stocks’ market caps match MYRG’s market cap.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $48 million in MYRG’s case. WMIH Corp (OTCMKTS:WMIH) is the most popular stock in this table. On the other hand El Pollo LoCo Holdings Inc (NASDAQ:LOCO) is the least popular one with only 8 bullish hedge fund positions. MYR Group Inc (NASDAQ:MYRG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WMIH might be a better candidate to consider taking a long position in.

Disclosure: None