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Hedge Funds Are Selling McGrath RentCorp (MGRC)

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Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets, hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards McGrath RentCorp (NASDAQ:MGRC).

Is McGrath RentCorp (NASDAQ:MGRC) undervalued? Prominent investors are in a pessimistic mood. The number of long hedge fund positions dropped by 3 recently. At the end of this article, we will also compare McGrath RentCorp (NASDAQ:MGRC) to other stocks including DHT Holdings Inc (NYSE:DHT), On Deck Capital Inc (NYSE:ONDK), and Tsakos Energy Navigation Ltd. (NYSE:TNP) to get a better sense of its popularity.

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In today’s marketplace, there are many formulas shareholders employ to size up their holdings. A couple of the less known formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite investment managers can outperform the market by a significant amount (see the details here).

With all of this in mind, we’re going to take a look at the new action surrounding McGrath RentCorp (NASDAQ:MGRC).

What have hedge funds been doing with McGrath RentCorp (NASDAQ:MGRC)?

Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 33% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in McGrath RentCorp (NASDAQ:MGRC). Royce & Associates has a $7.8 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is Renaissance Technologies holding a $1.9 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, Mario Gabelli’s GAMCO Investors, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

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