Here is What Hedge Funds Think About Mastech Digital, Inc. (MHH)
Is Mastech Digital, Inc. (NYSE:MHH) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Mastech Digital, Inc. (NYSE:MHH) was in 3 hedge funds' portfolios at the end of March. The all time high for this statistic is 5. MHH investors should pay attention to a decrease in hedge fund interest of late. There were 5 hedge funds in our database with MHH positions at the end of the fourth quarter. Our calculations also showed that MHH isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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. With all of this in mind let's view the latest hedge fund action regarding Mastech Digital, Inc. (NYSE:MHH).
Do Hedge Funds Think MHH Is A Good Stock To Buy Now?
At Q1's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -40% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in MHH over the last 23 quarters. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Mastech Digital, Inc. (NYSE:MHH) was held by Renaissance Technologies, which reported holding $3.5 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $0.4 million position. The only other hedge fund that is bullish on the company was Navellier & Associates.
Seeing as Mastech Digital, Inc. (NYSE:MHH) has experienced a decline in interest from the aggregate hedge fund industry, it's easy to see that there were a few funds who sold off their full holdings in the first quarter. At the top of the heap, Israel Englander's Millennium Management sold off the largest stake of the 750 funds monitored by Insider Monkey, totaling close to $0.4 million in stock, and Cliff Asness's AQR Capital Management was right behind this move, as the fund cut about $0.3 million worth. These moves are interesting, as total hedge fund interest dropped by 2 funds in the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Mastech Digital, Inc. (NYSE:MHH) but similarly valued. These stocks are Points International Ltd (NASDAQ:PCOM), Aptinyx Inc. (NASDAQ:APTX), Shore Bancshares, Inc. (NASDAQ:SHBI), Sierra Oncology, Inc. (NASDAQ:SRRA), VolitionRX Limited (NYSE:VNRX), Pacific Mercantile Bancorp (NASDAQ:PMBC), and Adamas Pharmaceuticals Inc (NASDAQ:ADMS). All of these stocks' market caps resemble MHH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PCOM,6,29606,-1 APTX,8,35957,-3 SHBI,8,34631,3 SRRA,14,116969,-1 VNRX,5,515,4 PMBC,7,32539,3 ADMS,18,66719,5 Average,9.4,45277,1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $4 million in MHH's case. Adamas Pharmaceuticals Inc (NASDAQ:ADMS) is the most popular stock in this table. On the other hand VolitionRX Limited (NYSE:VNRX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Mastech Digital, Inc. (NYSE:MHH) is even less popular than VNRX. Our overall hedge fund sentiment score for MHH is 21. 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. Hedge funds dodged a bullet by taking a bearish stance towards MHH. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th but managed to beat the market again by 3.3 percentage points. Unfortunately MHH wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); MHH investors were disappointed as the stock returned -10.3% since the end of the first quarter (through 6/11) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
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