At Insider Monkey we follow around 700 of the best-performing investors and even though many of them lost money in the last couple of months (70% of hedge funds lost money in October whereas S&P 500 ETF lost about 7%), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Hedge fund interest in MYR Group Inc (NASDAQ:MYRG) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Vera Bradley, Inc. (NASDAQ:VRA), Mobileiron Inc (NASDAQ:MOBL), and AC Immune SA (NASDAQ:ACIU) to gather more data points.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s go over the latest hedge fund action surrounding MYR Group Inc (NASDAQ:MYRG).
How are hedge funds trading MYR Group Inc (NASDAQ:MYRG)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, no change from the second quarter of 2018. By comparison, 13 hedge funds held shares or bullish call options in MYRG heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Third Avenue Management, managed by Martin Whitman, holds the number one position in MYR Group Inc (NASDAQ:MYRG). Third Avenue Management has a $9.8 million position in the stock, comprising 0.6% of its 13F portfolio. On Third Avenue Management’s heels is Renaissance Technologies, led by Jim Simons, holding a $2.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish consist of D. E. Shaw’s D E Shaw, Ken Fisher’s Fisher Asset Management and Ken Griffin’s Citadel Investment Group.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was PDT Partners).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as MYR Group Inc (NASDAQ:MYRG) but similarly valued. These stocks are Vera Bradley, Inc. (NASDAQ:VRA), Mobileiron Inc (NASDAQ:MOBL), AC Immune SA (NASDAQ:ACIU), and America’s Car-Mart, Inc. (NASDAQ:CRMT). This group of stocks’ market valuations are closest to MYRG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRA | 23 | 104930 | 8 |
| MOBL | 12 | 51984 | 0 |
| ACIU | 9 | 59456 | 5 |
| CRMT | 16 | 88669 | 3 |
| Average | 15 | 76260 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $23 million in MYRG’s case. Vera Bradley, Inc. (NASDAQ:VRA) is the most popular stock in this table. On the other hand AC Immune SA (NASDAQ:ACIU) is the least popular one with only 9 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 VRA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
