Mentor Graphics Corp (MENT): Are Hedge Funds Right About This Stock?

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Mentor Graphics Corp (NASDAQ:MENT) investors should pay attention to an increase in enthusiasm from smart money in recent months. At the end of this article we will also compare MENT to other stocks including Franks International NV (NYSE:FI), National General Holdings Corp (NASDAQ:NGHC), and South Jersey Industries Inc (NYSE:SJI) to get a better sense of its popularity.

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Now, we’re going to take a look at the fresh action regarding Mentor Graphics Corp (NASDAQ:MENT).

Hedge fund activity in Mentor Graphics Corp (NASDAQ:MENT)

At Q3’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the second quarter of 2016. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Elliott Management, managed by Paul Singer, holds the most valuable position in Mentor Graphics Corp (NASDAQ:MENT). Elliott Management has a $127.6 million position in the stock, comprising 1% of its 13F portfolio. Coming in second is AQR Capital Management, led by Cliff Asness, holding a $53.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism contain Ken Fisher’s Fisher Asset Management and Clint Carlson’s Carlson Capital.

As one would reasonably expect, key hedge funds have jumped into Mentor Graphics Corp (NASDAQ:MENT) headfirst. Roystone Capital Partners, managed by Richard Barrera, assembled the biggest position in Mentor Graphics Corp (NASDAQ:MENT). Roystone Capital Partners had $50.6 million invested in the company at the end of the quarter. Isaac Corre’s Governors Lane also made a $10.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Ricky Sandler’s Eminence Capital, Kenneth Squire’s 13D Management, and Neil Chriss’s Hutchin Hill Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Mentor Graphics Corp (NASDAQ:MENT) but similarly valued. These stocks are Franks International NV (NYSE:FI), National General Holdings Corp (NASDAQ:NGHC), South Jersey Industries Inc (NYSE:SJI), and Chemed Corporation (NYSE:CHE). This group of stocks’ market caps match MENT’s market cap.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $534 million in MENT’s case. National General Holdings Corp (NASDAQ:NGHC) is the most popular stock in this table. On the other hand South Jersey Industries Inc (NYSE:SJI) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Mentor Graphics Corp (NASDAQ:MENT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.