The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of more than 867 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded MGIC Investment Corporation (NYSE:MTG) based on those filings.
MGIC Investment Corporation (NYSE:MTG) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 27 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that MTG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). 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 Certara, Inc. (NASDAQ:CERT), Rayonier Inc. (NYSE:RYN), and Tilray, Inc. (NASDAQ:TLRY) to gather more data points.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a glance at the latest hedge fund action regarding MGIC Investment Corporation (NYSE:MTG).
Howard Marks of Oaktree Capital
Do Hedge Funds Think MTG Is A Good Stock To Buy Now?
At the end of September, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MTG over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of MGIC Investment Corporation (NYSE:MTG), with a stake worth $52 million reported as of the end of September. Trailing Arrowstreet Capital was King Street Capital, which amassed a stake valued at $49.1 million. Redwood Capital Management, Oaktree Capital Management, and Rubric Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position King Street Capital allocated the biggest weight to MGIC Investment Corporation (NYSE:MTG), around 4.15% of its 13F portfolio. Redwood Capital Management is also relatively very bullish on the stock, earmarking 3.72 percent of its 13F equity portfolio to MTG.
Judging by the fact that MGIC Investment Corporation (NYSE:MTG) has faced bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of hedge funds who sold off their entire stakes heading into Q4. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest position of all the hedgies watched by Insider Monkey, totaling about $19 million in stock, and Doug Silverman and Alexander Klabin’s Senator Investment Group was right behind this move, as the fund dropped about $8.2 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to MGIC Investment Corporation (NYSE:MTG). These stocks are Certara, Inc. (NASDAQ:CERT), Rayonier Inc. (NYSE:RYN), Tilray, Inc. (NASDAQ:TLRY), Semtech Corporation (NASDAQ:SMTC), Alliance Data Systems Corporation (NYSE:ADS), Progyny, Inc. (NASDAQ:PGNY), and Flowers Foods, Inc. (NYSE:FLO). This group of stocks’ market caps match MTG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CERT | 15 | 170457 | 8 |
| RYN | 13 | 329246 | 0 |
| TLRY | 16 | 84873 | -1 |
| SMTC | 29 | 290157 | 1 |
| ADS | 31 | 1119762 | -3 |
| PGNY | 28 | 200401 | -11 |
| FLO | 19 | 240286 | -2 |
| Average | 21.6 | 347883 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $348 million. That figure was $298 million in MTG’s case. Alliance Data Systems Corporation (NYSE:ADS) is the most popular stock in this table. On the other hand Rayonier Inc. (NYSE:RYN) is the least popular one with only 13 bullish hedge fund positions. MGIC Investment Corporation (NYSE:MTG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTG is 61.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately MTG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MTG were disappointed as the stock returned -2.7% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
