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 Mayville Engineering Company, Inc. (NYSE:MEC).
Mayville Engineering Company, Inc. (NYSE:MEC) was in 9 hedge funds' portfolios at the end of the second quarter of 2019. MEC shareholders have witnessed an increase in hedge fund interest in recent months. There were 0 hedge funds in our database with MEC positions at the end of the previous quarter. Our calculations also showed that MEC isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most traders, hedge funds are perceived as worthless, outdated financial tools of the past. While there are greater than 8000 funds in operation at the moment, Our researchers hone in on the moguls of this club, around 750 funds. Most estimates calculate that this group of people direct the majority of the smart money's total capital, and by monitoring their highest performing investments, Insider Monkey has discovered many investment strategies that have historically outpaced the broader indices. Insider Monkey's flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Now we're going to take a gander at the new hedge fund action surrounding Mayville Engineering Company, Inc. (NYSE:MEC).
What have hedge funds been doing with Mayville Engineering Company, Inc. (NYSE:MEC)?
At the end of the second quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MEC over the last 16 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Mayville Engineering Company, Inc. (NYSE:MEC) was held by One Fin Capital Management, which reported holding $6.1 million worth of stock at the end of March. It was followed by Driehaus Capital with a $4.2 million position. Other investors bullish on the company included Royce & Associates, ACK Asset Management, and Element Capital Management.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. One Fin Capital Management, managed by David MacKnight, established the most valuable position in Mayville Engineering Company, Inc. (NYSE:MEC). One Fin Capital Management had $6.1 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also initiated a $4.2 million position during the quarter. The other funds with new positions in the stock are Chuck Royce's Royce & Associates, Richard S. Meisenberg's ACK Asset Management, and Jeffrey Talpins's Element Capital Management.
Let's go over hedge fund activity in other stocks similar to Mayville Engineering Company, Inc. (NYSE:MEC). We will take a look at Mesa Air Group, Inc. (NASDAQ:MESA), Endeavour Silver Corp. (NYSE:EXK), Del Frisco's Restaurant Group Inc (NASDAQ:DFRG), and Gold Standard Ventures Corp (NYSEAMEX:GSV). This group of stocks' market caps are closest to MEC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MESA,19,62922,2 EXK,6,17798,-1 DFRG,11,99142,-3 GSV,2,233,-1 Average,9.5,45024,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $22 million in MEC's case. Mesa Air Group, Inc. (NASDAQ:MESA) is the most popular stock in this table. On the other hand Gold Standard Ventures Corp (NYSEAMEX:GSV) is the least popular one with only 2 bullish hedge fund positions. Mayville Engineering Company, Inc. (NYSE:MEC) 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MEC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MEC investors were disappointed as the stock returned -4.4% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.