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The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Matrix Service Co (NASDAQ:MTRX).
Is MTRX a good stock to buy now? Matrix Service Co (NASDAQ:MTRX) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds' portfolios at the end of September. Our calculations also showed that MTRX 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). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as NN, Inc. (NASDAQ:NNBR), Retractable Technologies, Inc. (NYSE:RVP), and Tuscan Holdings Corp. II (NASDAQ:THCA) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are assumed to be underperforming, outdated financial vehicles of yesteryear. While there are greater than 8000 funds in operation at present, We choose to focus on the crème de la crème of this group, around 850 funds. These money managers manage most of the hedge fund industry's total asset base, and by shadowing their finest picks, Insider Monkey has spotted a number of investment strategies that have historically defeated the market. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Michael Gelband of ExodusPoint Capital
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. Now let's take a peek at the recent hedge fund action regarding Matrix Service Co (NASDAQ:MTRX).
Do Hedge Funds Think MTRX Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards MTRX over the last 21 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, Engine Capital held the most valuable stake in Matrix Service Co (NASDAQ:MTRX), which was worth $3.8 million at the end of the third quarter. On the second spot was Rutabaga Capital Management which amassed $2.8 million worth of shares. Arrowstreet Capital, D E Shaw, and AQR 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 Engine Capital allocated the biggest weight to Matrix Service Co (NASDAQ:MTRX), around 1.94% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, dishing out 1.61 percent of its 13F equity portfolio to MTRX.
Seeing as Matrix Service Co (NASDAQ:MTRX) has faced falling interest from the aggregate hedge fund industry, we can see that there were a few money managers that decided to sell off their positions entirely in the third quarter. Interestingly, Michael Gelband's ExodusPoint Capital sold off the biggest investment of the "upper crust" of funds tracked by Insider Monkey, valued at about $0.4 million in stock, and Bruce Kovner's Caxton Associates LP was right behind this move, as the fund said goodbye to about $0.3 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Matrix Service Co (NASDAQ:MTRX). These stocks are NN, Inc. (NASDAQ:NNBR), Retractable Technologies, Inc. (NYSE:RVP), Tuscan Holdings Corp. II (NASDAQ:THCA), Regis Corporation (NYSE:RGS), QEP Resources Inc (NYSE:QEP), Ryerson Holding Corporation (NYSE:RYI), and Fulcrum Therapeutics, Inc. (NASDAQ:FULC). This group of stocks' market caps match MTRX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NNBR,5,24506,0 RVP,5,12128,1 THCA,8,33185,0 RGS,12,84596,2 QEP,14,21907,-5 RYI,13,10861,0 FULC,10,40391,-1 Average,9.6,32511,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.6 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $14 million in MTRX's case. QEP Resources Inc (NYSE:QEP) is the most popular stock in this table. On the other hand NN, Inc. (NASDAQ:NNBR) is the least popular one with only 5 bullish hedge fund positions. Matrix Service Co (NASDAQ:MTRX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTRX is 76. 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. Hedge funds were also right about betting on MTRX as the stock returned 18.7% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.