Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Magna International Inc. (NYSE:MGA).
Is Magna International Inc. (NYSE:MGA) a good investment now? The smart money was getting less optimistic. The number of bullish hedge fund bets shrunk by 4 in recent months. Magna International Inc. (NYSE:MGA) was in 34 hedge funds’ portfolios at the end of March. The all time high for this statistic is 43. Our calculations also showed that MGA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 38 hedge funds in our database with MGA holdings at the end of December.
At the moment there are several gauges market participants put to use to size up stocks. A couple of the best gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite fund managers can outpace the market by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Louis Bacon Moore of Moore Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s analyze the latest hedge fund action regarding Magna International Inc. (NYSE:MGA).
Do Hedge Funds Think MGA Is A Good Stock To Buy Now?
At the end of March, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in MGA a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Moore Global Investments was the largest shareholder of Magna International Inc. (NYSE:MGA), with a stake worth $148.9 million reported as of the end of March. Trailing Moore Global Investments was Arrowstreet Capital, which amassed a stake valued at $115 million. East Side Capital (RR Partners), GLG Partners, and ARK Investment 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 East Side Capital (RR Partners) allocated the biggest weight to Magna International Inc. (NYSE:MGA), around 9.48% of its 13F portfolio. Highline Capital Management is also relatively very bullish on the stock, earmarking 7.43 percent of its 13F equity portfolio to MGA.
Judging by the fact that Magna International Inc. (NYSE:MGA) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedge funds that decided to sell off their full holdings by the end of the first quarter. It’s worth mentioning that Zach Schreiber’s Point State Capital sold off the largest investment of all the hedgies monitored by Insider Monkey, valued at about $48.7 million in stock, and Till Bechtolsheimer’s Arosa Capital Management was right behind this move, as the fund dropped about $13.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 4 funds by the end of the first quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Magna International Inc. (NYSE:MGA) but similarly valued. These stocks are BioNTech SE (NASDAQ:BNTX), XPeng Inc. (NYSE:XPEV), Zebra Technologies Corporation (NASDAQ:ZBRA), Ryanair Holdings plc (NASDAQ:RYAAY), Banco Santander (Brasil) SA (NYSE:BSBR), Hormel Foods Corporation (NYSE:HRL), and DTE Energy Company (NYSE:DTE). All of these stocks’ market caps match MGA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BNTX | 18 | 172627 | 1 |
| XPEV | 19 | 976276 | -11 |
| ZBRA | 35 | 1163526 | -6 |
| RYAAY | 14 | 568235 | -9 |
| BSBR | 5 | 3887 | -1 |
| HRL | 26 | 483859 | -5 |
| DTE | 26 | 205605 | -3 |
| Average | 20.4 | 510574 | -4.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $511 million. That figure was $672 million in MGA’s case. Zebra Technologies Corporation (NASDAQ:ZBRA) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 5 bullish hedge fund positions. Magna International Inc. (NYSE:MGA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MGA is 73.1. 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. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on MGA, though not to the same extent, as the stock returned 7.7% since Q1 (through June 25th) and outperformed the market as well.
Follow Magna International Inc (NYSE:MGA)
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Disclosure: None. This article was originally published at Insider Monkey.
