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Madison Investments’ Sees ‘Better Days Ahead’ for Magnite Inc. (MGNI)

Jose Karlo Mari Tottoc
·4 min read

Madison Funds, an independent employee-owned investment firm, published its third-quarter Madison Small Cap Fund – a copy of which can be downloaded here. A positive return of 6.97% was recorded by the fund for the 3rd Quarter of 2020, ahead with its Russell 2000 benchmark that returned 4.93%. You can view the fund’s top 10 holdings to have a peek at their top bets for 2021.

Madison Investments in their Q3 2020 Investor Letter said that they grasped the value of Magnite Inc. (NASDAQ: MGNI) and was able to stocked shares of the company. Magnite Inc. is an advertising technology platform that currently has a $3.07 billion market cap. For the past 3 months, Magnite delivered a massive 217.38% return and settled at $27.80 per share at the closing of January 14th.

Here is what they have to say about Magnite Inc. in their Investor Letter:

"Although finding new ideas in technology was difficult given the high valuations we’ve already discussed, we initiated on a new investment position in advertising technology platform Magnite (MGNI). Magnite’s stock price had declined from a pre-pandemic high of around $13 in February, down to a low of $4 in March. Unlike ETSY, MGNI’s business is not simple. Their core offering is a platform for independent digital ad publishers. Independents are separate from Facebook or Google, which are walled gardens. They use Magnite to offer their inventory in a programmatic (meaning non-manual) fashion to digital advertisers. Magnite is therefore a supply side platform (SSP). Although MGNI is now the largest SSP, the space is highly fragmented. In addition, MGNI has the lowest cost, highest scale platform, with a strong, cash rich balance sheet. Advertisers want to work with a fewer number of SSP’s and the smaller scale SSPs do not have the scale nor the financial might to compete especially during this unusually difficult economic time for advertisers. This puts MGNI in the ideal position to consolidate the industry. Through our conversations with management and industry participants, we believe MGNI can at least double its size over time as it executes on this consolidation strategy."

Last December 2020, we published an article telling that Magnite Inc (NASDAQ: MGNI) was in 24 hedge funds’ portfolios, almost making it to its all time high statistics of 25. Magnite proved its worth by delivering a 188.94% return for the past 12 months.

As of September 2020, the hedge fund Nine Ten Partners had a 4.9 million share position in MGNI that amounted to $34 million. This made Nine Ten Partners as the top hedge fund that holds most of Magnite’s stake, followed by Royce & Associates with $20.4 million worth of Magnite shares, and HMI Capital with $18.5 million. However, our calculations showed that Magnite Inc. (NASDAQ: MGNI) does not belong to the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of the dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website.

Disclosure: None. This article is originally published at Insider Monkey.