Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about MasTec, Inc. (NYSE:MTZ) and compare its performance to hedge funds’ consensus picks in 2019.
MasTec, Inc. (NYSE:MTZ) has experienced an increase in enthusiasm from smart money of late. Our calculations also showed that MTZ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
At the moment there are plenty of tools market participants employ to evaluate publicly traded companies. A couple of the less known tools are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the best money managers can outpace the S&P 500 by a superb amount (see the details here).
Cliff Asness of AQR Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s take a glance at the key hedge fund action regarding MasTec, Inc. (NYSE:MTZ).
How have hedgies been trading MasTec, Inc. (NYSE:MTZ)?
At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MTZ over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the biggest position in MasTec, Inc. (NYSE:MTZ). AQR Capital Management has a $28.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On AQR Capital Management’s heels is Alyeska Investment Group, led by Anand Parekh, holding a $23.7 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions include Eric F. Billings’s Billings Capital Management, Ken Griffin’s Citadel Investment Group and William Harnisch’s Peconic Partners. In terms of the portfolio weights assigned to each position Billings Capital Management allocated the biggest weight to MasTec, Inc. (NYSE:MTZ), around 23.27% of its 13F portfolio. Southport Management is also relatively very bullish on the stock, earmarking 8.22 percent of its 13F equity portfolio to MTZ.
As one would reasonably expect, key money managers were leading the bulls’ herd. D E Shaw, managed by David E. Shaw, initiated the most valuable position in MasTec, Inc. (NYSE:MTZ). D E Shaw had $9.2 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $3.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Frederick DiSanto’s Ancora Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Mike Vranos’s Ellington.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as MasTec, Inc. (NYSE:MTZ) but similarly valued. These stocks are Churchill Downs Incorporated (NASDAQ:CHDN), MAXIMUS, Inc. (NYSE:MMS), Millicom International Cellular S.A. (NASDAQ:TIGO), and Life Storage, Inc. (NYSE:LSI). This group of stocks’ market values are similar to MTZ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHDN | 25 | 720523 | 0 |
| MMS | 23 | 223777 | 1 |
| TIGO | 6 | 96480 | 1 |
| LSI | 15 | 226876 | -5 |
| Average | 17.25 | 316914 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $317 million. That figure was $208 million in MTZ’s case. Churchill Downs Incorporated (NASDAQ:CHDN) is the most popular stock in this table. On the other hand Millicom International Cellular S.A. (NASDAQ:TIGO) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks MasTec, Inc. (NYSE:MTZ) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on MTZ as the stock returned 60.2% so far in 2019 (through 12/23) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
