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Hedge Funds Are Piling Into Mesa Air Group, Inc. (MESA)

·6 min read

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 Mesa Air Group, Inc. (NASDAQ:MESA).

Mesa Air Group, Inc. (NASDAQ:MESA) investors should pay attention to an increase in enthusiasm from smart money recently. Mesa Air Group, Inc. (NASDAQ:MESA) was in 20 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MESA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To most stock holders, hedge funds are assumed to be slow, outdated investment tools of years past. While there are more than 8000 funds trading today, Our experts choose to focus on the masters of this club, about 850 funds. These money managers watch over most of the hedge fund industry's total asset base, and by monitoring their matchless picks, Insider Monkey has found many investment strategies that have historically defeated the broader indices. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. 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 .

TUDOR INVESTMENT CORP
TUDOR INVESTMENT CORP

Paul Tudor Jones of Tudor Investment Corp

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Do Hedge Funds Think MESA Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in MESA a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

The largest stake in Mesa Air Group, Inc. (NASDAQ:MESA) was held by Royce & Associates, which reported holding $25.2 million worth of stock at the end of December. It was followed by Driehaus Capital with a $10.2 million position. Other investors bullish on the company included D E Shaw, MSDC Management, and Millennium Management. In terms of the portfolio weights assigned to each position MSDC Management allocated the biggest weight to Mesa Air Group, Inc. (NASDAQ:MESA), around 0.31% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.17 percent of its 13F equity portfolio to MESA.

Consequently, key money managers were leading the bulls' herd. Driehaus Capital, managed by Richard Driehaus, initiated the most outsized position in Mesa Air Group, Inc. (NASDAQ:MESA). Driehaus Capital had $10.2 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also made a $8.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones's Tudor Investment Corp, Ken Griffin's Citadel Investment Group, and Peter Muller's PDT Partners.

Let's also examine hedge fund activity in other stocks similar to Mesa Air Group, Inc. (NASDAQ:MESA). These stocks are McEwen Mining Inc (NYSE:MUX), Gamida Cell Ltd. (NASDAQ:GMDA), Akouos, Inc. (NASDAQ:AKUS), Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), AquaBounty Technologies, Inc. (NASDAQ:AQB), Homology Medicines, Inc. (NASDAQ:FIXX), and Nautilus, Inc. (NYSE:NLS). This group of stocks' market caps are closest to MESA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MUX,5,18635,-5 GMDA,14,73639,0 AKUS,9,94380,-2 SPPI,8,47544,-1 AQB,10,61518,5 FIXX,7,11553,0 NLS,20,45869,0 Average,10.4,50448,-0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.4 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $70 million in MESA's case. Nautilus, Inc. (NYSE:NLS) is the most popular stock in this table. On the other hand McEwen Mining Inc (NYSE:MUX) is the least popular one with only 5 bullish hedge fund positions. Mesa Air Group, Inc. (NASDAQ:MESA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MESA is 90. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately MESA wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MESA were disappointed as the stock returned -33.8% since the end of March (through 7/16) 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.