U.S. Markets closed

Some Hedge Funds Are Dumping MKS Instruments, Inc. (MKSI)

Reymerlyn Martin

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won't accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Is MKS Instruments, Inc. (NASDAQ:MKSI) an exceptional stock to buy now? Investors who are in the know are reducing their bets on the stock. The number of bullish hedge fund positions dropped by 3 lately. Our calculations also showed that MKSI isn't among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of indicators market participants use to assess publicly traded companies. A couple of the most innovative indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top money managers can outclass the S&P 500 by a solid amount (see the details here).

RENAISSANCE TECHNOLOGIES

We're going to analyze the fresh hedge fund action regarding MKS Instruments, Inc. (NASDAQ:MKSI).

What does the smart money think about MKS Instruments, Inc. (NASDAQ:MKSI)?

Heading into the fourth quarter of 2018, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MKSI over the last 13 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

MKSI_dec2018

More specifically, Renaissance Technologies was the largest shareholder of MKS Instruments, Inc. (NASDAQ:MKSI), with a stake worth $152.5 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $85.3 million. AQR Capital Management, Fisher Asset Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.

Because MKS Instruments, Inc. (NASDAQ:MKSI) has witnessed a decline in interest from the aggregate hedge fund industry, it's safe to say that there lies a certain "tier" of hedge funds who sold off their entire stakes last quarter. It's worth mentioning that Peter Muller's PDT Partners dropped the biggest stake of the "upper crust" of funds followed by Insider Monkey, valued at close to $10.6 million in stock, and George Hall's Clinton Group was right behind this move, as the fund sold off about $2.6 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 3 funds last quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as MKS Instruments, Inc. (NASDAQ:MKSI) but similarly valued. These stocks are Rayonier Inc. (NYSE:RYN), Emcor Group Inc (NYSE:EME), Proto Labs Inc (NYSE:PRLB), and The Scotts Miracle-Gro Company (NYSE:SMG). This group of stocks' market valuations are similar to MKSI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RYN,17,303151,1 EME,20,231394,3 PRLB,5,11266,-3 SMG,23,280789,2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $207 million. That figure was $448 million in MKSI's case. The Scotts Miracle-Gro Company (NYSE:SMG) is the most popular stock in this table. On the other hand 0 is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks MKS Instruments, Inc. (NASDAQ:MKSI) 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.

Disclosure: None. This article was originally published at Insider Monkey.

Related Content