There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze MGE Energy, Inc. (NASDAQ:MGEE).
Is MGE Energy, Inc. (NASDAQ:MGEE) worth your attention right now? Money managers are in a bullish mood. The number of bullish hedge fund positions improved by 4 lately. Our calculations also showed that mgee isn't among the 30 most popular stocks among hedge funds. MGEE was in 12 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 8 hedge funds in our database with MGEE positions at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a look at the latest hedge fund action surrounding MGE Energy, Inc. (NASDAQ:MGEE).
What does the smart money think about MGE Energy, Inc. (NASDAQ:MGEE)?
At Q4's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MGEE over the last 14 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in MGE Energy, Inc. (NASDAQ:MGEE), which was worth $24.6 million at the end of the third quarter. On the second spot was Millennium Management which amassed $2 million worth of shares. Moreover, D E Shaw, BlueCrest Capital Mgmt., and Citadel Investment Group were also bullish on MGE Energy, Inc. (NASDAQ:MGEE), allocating a large percentage of their portfolios to this stock.
Consequently, some big names have jumped into MGE Energy, Inc. (NASDAQ:MGEE) headfirst. Millennium Management, managed by Israel Englander, assembled the most outsized position in MGE Energy, Inc. (NASDAQ:MGEE). Millennium Management had $2 million invested in the company at the end of the quarter. Michael Platt and William Reeves's BlueCrest Capital Mgmt. also initiated a $1.3 million position during the quarter. The following funds were also among the new MGEE investors: Paul Marshall and Ian Wace's Marshall Wace LLP and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's now take a look at hedge fund activity in other stocks similar to MGE Energy, Inc. (NASDAQ:MGEE). We will take a look at Mantech International Corp (NASDAQ:MANT), Select Medical Holdings Corporation (NYSE:SEM), Avalara, Inc. (NYSE:AVLR), and The Navigators Group, Inc (NASDAQ:NAVG). This group of stocks' market caps match MGEE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MANT,10,7768,-4 SEM,19,153809,0 AVLR,14,535698,-1 NAVG,17,243042,0 Average,15,235079,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $235 million. That figure was $34 million in MGEE's case. Select Medical Holdings Corporation (NYSE:SEM) is the most popular stock in this table. On the other hand Mantech International Corp (NASDAQ:MANT) is the least popular one with only 10 bullish hedge fund positions. MGE Energy, Inc. (NASDAQ:MGEE) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately MGEE wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); MGEE investors were disappointed as the stock returned 10.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.