A market correction in the fourth quarter, spurred by a number of global macroeconomic concerns and rising interest rates ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by 4 percentage points during the first half of the fourth quarter. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let's study the hedge fund sentiment to see how those concerns affected their ownership of Mesabi Trust (NYSE:MSB) during the quarter.
Is Mesabi Trust (NYSE:MSB) undervalued? Hedge funds are getting more optimistic. The number of bullish hedge fund bets went up by 1 recently. Our calculations also showed that msb isn't among the 30 most popular stocks among hedge funds. MSB was in 8 hedge funds' portfolios at the end of September. There were 7 hedge funds in our database with MSB holdings at the end of the previous quarter.
At the moment there are several signals stock market investors put to use to analyze publicly traded companies. A pair of the most under-the-radar signals are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite money managers can beat the S&P 500 by a solid amount (see the details here).
We're going to take a glance at the recent hedge fund action regarding Mesabi Trust (NYSE:MSB).
Hedge fund activity in Mesabi Trust (NYSE:MSB)
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in MSB heading into this year. 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, Beddow Capital Management was the largest shareholder of Mesabi Trust (NYSE:MSB), with a stake worth $14.1 million reported as of the end of September. Trailing Beddow Capital Management was Valueworks LLC, which amassed a stake valued at $4.5 million. Arrowstreet Capital, Horizon Asset Management, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, some big names were breaking ground themselves. Horizon Asset Management, managed by Murray Stahl, assembled the biggest position in Mesabi Trust (NYSE:MSB). Horizon Asset Management had $1.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also made a $0.3 million investment in the stock during the quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Mesabi Trust (NYSE:MSB) but similarly valued. These stocks are Selecta Biosciences, Inc. (NASDAQ:SELB), GNC Holdings Inc (NYSE:GNC), Landmark Infrastructure Partners LP (NASDAQ:LMRK), and Consolidated-Tomoka Land Co. (NYSE:CTO). All of these stocks' market caps match MSB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SELB,8,35612,2 GNC,14,28702,-4 LMRK,4,4476,2 CTO,9,137055,2 Average,8.75,51461,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $25 million in MSB's case. GNC Holdings Inc (NYSE:GNC) is the most popular stock in this table. On the other hand Landmark Infrastructure Partners LP (NASDAQ:LMRK) is the least popular one with only 4 bullish hedge fund positions. Mesabi Trust (NYSE:MSB) 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. In this regard GNC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.