The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity 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 March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Mesa Laboratories, Inc. (NASDAQ:MLAB) based on those filings.
Mesa Laboratories, Inc. (NASDAQ:MLAB) was in 7 hedge funds' portfolios at the end of March. MLAB has seen a decrease in enthusiasm from smart money recently. There were 10 hedge funds in our database with MLAB holdings at the end of the previous quarter. Our calculations also showed that MLAB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_745225" align="aligncenter" width="396"] Noam Gottesman of GLG Partners[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to review the fresh hedge fund action encompassing Mesa Laboratories, Inc. (NASDAQ:MLAB).
What does smart money think about Mesa Laboratories, Inc. (NASDAQ:MLAB)?
At Q1's end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -30% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in MLAB a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Royce & Associates was the largest shareholder of Mesa Laboratories, Inc. (NASDAQ:MLAB), with a stake worth $60.1 million reported as of the end of September. Trailing Royce & Associates was Renaissance Technologies, which amassed a stake valued at $7.7 million. GLG Partners, Marshall Wace LLP, and Citadel Investment Group 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 Royce & Associates allocated the biggest weight to Mesa Laboratories, Inc. (NASDAQ:MLAB), around 0.82% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to MLAB.
Due to the fact that Mesa Laboratories, Inc. (NASDAQ:MLAB) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there exists a select few fund managers that decided to sell off their full holdings last quarter. Interestingly, Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners dropped the largest stake of all the hedgies monitored by Insider Monkey, worth close to $13.7 million in stock. Michael Johnston's fund, Steelhead Partners, also cut its stock, about $3.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Mesa Laboratories, Inc. (NASDAQ:MLAB) but similarly valued. We will take a look at BP Midstream Partners LP (NYSE:BPMP), Phibro Animal Health Corp (NASDAQ:PAHC), Health Catalyst, Inc (NASDAQ:HCAT), and Infinera Corp. (NASDAQ:INFN). This group of stocks' market caps are closest to MLAB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BPMP,5,6669,-1 PAHC,16,53809,0 HCAT,14,90051,6 INFN,14,203469,-3 Average,12.25,88500,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $73 million in MLAB's case. Phibro Animal Health Corp (NASDAQ:PAHC) is the most popular stock in this table. On the other hand BP Midstream Partners LP (NYSE:BPMP) is the least popular one with only 5 bullish hedge fund positions. Mesa Laboratories, Inc. (NASDAQ:MLAB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately MLAB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MLAB investors were disappointed as the stock returned -1.6% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.