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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is MGP Ingredients Inc (NASDAQ:MGPI), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is MGPI a good stock to buy now? MGPI has seen a decrease in enthusiasm from smart money recently. MGP Ingredients Inc (NASDAQ:MGPI) was in 11 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 15. Our calculations also showed that MGPI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Fred DiSanto of Ancora Advisors
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 15 best blue chip stocks 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. Keeping this in mind let's check out the fresh hedge fund action regarding MGP Ingredients Inc (NASDAQ:MGPI).
Do Hedge Funds Think MGPI Is A Good Stock To Buy Now?
At third quarter's end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in MGPI a year ago. 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, Royce & Associates was the largest shareholder of MGP Ingredients Inc (NASDAQ:MGPI), with a stake worth $9.5 million reported as of the end of September. Trailing Royce & Associates was Citadel Investment Group, which amassed a stake valued at $1.8 million. Voss Capital, SG Capital Management, and Winton Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Voss Capital allocated the biggest weight to MGP Ingredients Inc (NASDAQ:MGPI), around 0.99% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, setting aside 0.48 percent of its 13F equity portfolio to MGPI.
Since MGP Ingredients Inc (NASDAQ:MGPI) has faced a decline in interest from hedge fund managers, logic holds that there lies a certain "tier" of hedge funds that elected to cut their full holdings last quarter. It's worth mentioning that Bryant Regan's Lafitte Capital Management said goodbye to the largest investment of the "upper crust" of funds followed by Insider Monkey, totaling about $3.7 million in stock, and Parvinder Thiara's Athanor Capital was right behind this move, as the fund dumped about $0.8 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.
Let's now review hedge fund activity in other stocks similar to MGP Ingredients Inc (NASDAQ:MGPI). We will take a look at The Shyft Group, Inc. (NASDAQ:SHYF), Kadmon Holdings, Inc. (NASDAQ:KDMN), Solar Capital Ltd. (NASDAQ:SLRC), Federal Agricultural Mortgage Corp. (NYSE:AGM), Hollysys Automation Technologies Ltd (NASDAQ:HOLI), IES Holdings, Inc. (NASDAQ:IESC), and UP Fintech Holding Limited (NASDAQ:TIGR). This group of stocks' market values are closest to MGPI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SHYF,13,71919,-5 KDMN,24,304665,-5 SLRC,12,20556,0 AGM,11,13712,3 HOLI,13,75165,3 IESC,9,412002,1 TIGR,6,5195,2 Average,12.6,129031,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $129 million. That figure was $19 million in MGPI's case. Kadmon Holdings, Inc. (NASDAQ:KDMN) is the most popular stock in this table. On the other hand UP Fintech Holding Limited (NASDAQ:TIGR) is the least popular one with only 6 bullish hedge fund positions. MGP Ingredients Inc (NASDAQ:MGPI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MGPI is 38.9. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on MGPI as the stock returned 12% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.