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Did Hedge Funds Drop The Ball On MDC Partners Inc. (MDCA) ?

Insider Monkey finished processing more than 738 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2019. What do these smart investors think about MDC Partners Inc. (NASDAQ:MDCA)?

MDC Partners Inc. (NASDAQ:MDCA) investors should pay attention to an increase in support from the world’s most elite money managers of late. Our calculations also showed that mdca isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a multitude of gauges stock market investors have at their disposal to assess stocks. A couple of the most under-the-radar gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best money managers can outclass the broader indices by a very impressive amount (see the details here).

BlueMountain Capital Management's Returns, AUM and Holdings

Let’s check out the recent hedge fund action encompassing MDC Partners Inc. (NASDAQ:MDCA).

How have hedgies been trading MDC Partners Inc. (NASDAQ:MDCA)?

Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in MDCA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with MDCA Positions

More specifically, Indaba Capital Management was the largest shareholder of MDC Partners Inc. (NASDAQ:MDCA), with a stake worth $15.6 million reported as of the end of March. Trailing Indaba Capital Management was FrontFour Capital Group, which amassed a stake valued at $5.9 million. Redwood Capital Management, Blue Mountain Capital, and Highbridge Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

As industrywide interest jumped, some big names have jumped into MDC Partners Inc. (NASDAQ:MDCA) headfirst. Clearline Capital, managed by Marc Majzner, established the most outsized position in MDC Partners Inc. (NASDAQ:MDCA). Clearline Capital had $0.8 million invested in the company at the end of the quarter. Matthew Drapkin and Steven R. Becker’s Becker Drapkin Management also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Jim Simons’s Renaissance Technologies, Ken Griffin’s Citadel Investment Group, and Joel Greenblatt’s Gotham Asset Management.

Let’s go over hedge fund activity in other stocks similar to MDC Partners Inc. (NASDAQ:MDCA). We will take a look at Acacia Research Corporation (NASDAQ:ACTG), Community Bankers Trust Corp. (NASDAQ:ESXB), Escalade, Inc. (NASDAQ:ESCA), and Hill International Inc (NYSE:HIL). This group of stocks’ market caps are similar to MDCA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACTG 14 25644 1
ESXB 4 17035 0
ESCA 4 11822 1
HIL 13 39071 0
Average 8.75 23393 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $34 million in MDCA’s case. Acacia Research Corporation (NASDAQ:ACTG) is the most popular stock in this table. On the other hand Community Bankers Trust Corp. (NASDAQ:ESXB) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks MDC Partners Inc. (NASDAQ:MDCA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on MDCA as the stock returned 25.8% during the same period 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.

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