Moneygram International Inc (MGI): Hedge Funds Are Snapping Up

Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.

Shares of Moneygram International Inc (NYSE:MGI) lost 12% during the third quarter, but the number of funds with long positions in the company went up by two during the same period. 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 Crestwood Equity Partners LP (NYSE:CEQP), pdvWireless Inc (NASDAQ:PDVW), and Kadant Inc. (NYSE:KAI) to gather more data points.

According to most investors, hedge funds are assumed to be unimportant, old investment vehicles of years past. While there are greater than 8000 funds trading at the moment, Our experts look at the moguls of this group, about 700 funds. These hedge fund managers shepherd the lion’s share of the hedge fund industry’s total capital, and by paying attention to their best investments, Insider Monkey has identified numerous investment strategies that have historically defeated the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Keeping this in mind, we’re going to view the latest action encompassing Moneygram International Inc (NYSE:MGI).

What does the smart money think about Moneygram International Inc (NYSE:MGI)?

At the Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Abrams Capital Management, managed by David Abrams, holds the most valuable position in Moneygram International Inc (NYSE:MGI). Abrams Capital Management has a $41.1 million position in the stock, comprising 2.9% of its 13F portfolio. Coming in second is Carlson Capital, led by Clint Carlson, holding a $29.1 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions encompass D. E. Shaw’s D E Shaw, Cliff Asness’s AQR Capital Management, and Jim Simons’ Renaissance Technologies.

As one would reasonably expect, specific money managers have jumped into Moneygram International Inc (NYSE:MGI) headfirst. Highbridge Capital Management, managed by Glenn Russell Dubin, created the largest position in Moneygram International Inc (NYSE:MGI). Highbridge Capital Management had $0.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made an $0.2 million investment in the stock during the quarter. The only other fund with a brand new MGI position is Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Let’s go over hedge fund activity in other stocks similar to Moneygram International Inc (NYSE:MGI). These stocks are Crestwood Equity Partners LP (NYSE:CEQP), pdvWireless Inc (NASDAQ:PDVW), Kadant Inc. (NYSE:KAI), and Winmark Corporation (NASDAQ:WINA). This group of stocks’ market values match MGI’s market value.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $81 million in MGI’s case. Kadant Inc. (NYSE:KAI) is the most popular stock in this table. On the other hand Crestwood Equity Partners LP (NYSE:CEQP) and Winmark Corporation (NASDAQ:WINA) are the least popular ones with only 6 bullish hedge fund positions. Moneygram International Inc (NYSE:MGI) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KAI might be a better candidate to consider a long position.