Did Hedge Funds Drop The Ball On MasTec, Inc. (MTZ) ?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards MasTec, Inc. (NYSE:MTZ).

Is MasTec, Inc. (NYSE:MTZ) going to take off soon? Prominent investors are taking a pessimistic view. The number of bullish hedge fund bets dropped by 1 lately. Our calculations also showed that mtz isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

William Harnisch

Let’s view the key hedge fund action surrounding MasTec, Inc. (NYSE:MTZ).

What does the smart money think about MasTec, Inc. (NYSE:MTZ)?

Heading into the first quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in MTZ a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

No of Hedge Funds With MTZ Positions

When looking at the institutional investors followed by Insider Monkey, William Harnisch’s Peconic Partners LLC has the biggest position in MasTec, Inc. (NYSE:MTZ), worth close to $177.8 million, corresponding to 43.5% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $40 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism consist of Ken Grossman and Glen Schneider’s SG Capital Management, Anand Parekh’s Alyeska Investment Group and Jonathan Barrett and Paul Segal’s Luminus Management.

Because MasTec, Inc. (NYSE:MTZ) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds that elected to cut their positions entirely by the end of the third quarter. Interestingly, Clint Carlson’s Carlson Capital sold off the biggest position of the 700 funds tracked by Insider Monkey, totaling about $22.3 million in stock. Robert Boucai’s fund, Newbrook Capital Advisors, also dropped its stock, about $22.3 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as MasTec, Inc. (NYSE:MTZ) but similarly valued. We will take a look at F.N.B. Corp (NYSE:FNB), National Health Investors Inc (NYSE:NHI), Two Harbors Investment Corp (NYSE:TWO), and Weingarten Realty Investors (NYSE:WRI). This group of stocks’ market values are similar to MTZ’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FNB 20 84740 8
NHI 13 98672 3
TWO 16 44988 2
WRI 12 46342 1
Average 15.25 68686 3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $425 million in MTZ’s case. F.N.B. Corp (NYSE:FNB) is the most popular stock in this table. On the other hand Weingarten Realty Investors (NYSE:WRI) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks MasTec, Inc. (NYSE:MTZ) is more popular among hedge funds. 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. Hedge funds were also right about betting on MTZ as the stock returned 29.1% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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