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Hedge Funds Are Dumping MGP Ingredients Inc (MGPI)

After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 28. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards MGP Ingredients Inc (NASDAQ:MGPI).

MGP Ingredients Inc (NASDAQ:MGPI) investors should pay attention to a decrease in support from the world’s most elite money managers recently. MGPI was in 7 hedge funds’ portfolios at the end of June. There were 13 hedge funds in our database with MGPI holdings at the end of the previous quarter. Our calculations also showed that MGPI isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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 40 percentage points since May 2014 through May 30, 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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

CHILTON INVESTMENT COMPANY

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the key hedge fund action regarding MGP Ingredients Inc (NASDAQ:MGPI).

Hedge fund activity in MGP Ingredients Inc (NASDAQ:MGPI)

Heading into the third quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -46% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MGPI over the last 16 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

No of Hedge Funds with MGPI Positions

When looking at the institutional investors followed by Insider Monkey, Cardinal Capital, managed by Amy Minella, holds the biggest position in MGP Ingredients Inc (NASDAQ:MGPI). Cardinal Capital has a $11.4 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $7.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that are bullish comprise Ken Griffin’s Citadel Investment Group, and Richard Chilton’s Chilton Investment Company.

Judging by the fact that MGP Ingredients Inc (NASDAQ:MGPI) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of money managers who were dropping their positions entirely last quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the biggest investment of the 750 funds monitored by Insider Monkey, comprising an estimated $1.1 million in stock, and Jim Simons’s Renaissance Technologies was right behind this move, as the fund said goodbye to about $0.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to MGP Ingredients Inc (NASDAQ:MGPI). We will take a look at Boise Cascade Company (NYSE:BCC), Enterprise Financial Services Corp (NASDAQ:EFSC), Teekay LNG Partners L.P. (NYSE:TGP), and Lantheus Holdings Inc (NASDAQ:LNTH). All of these stocks’ market caps are closest to MGPI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BCC 11 50811 -2
EFSC 13 52710 -2
TGP 9 43758 1
LNTH 15 103780 -3
Average 12 62765 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $24 million in MGPI’s case. Lantheus Holdings Inc (NASDAQ:LNTH) is the most popular stock in this table. On the other hand Teekay LNG Partners L.P. (NYSE:TGP) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks MGP Ingredients Inc (NASDAQ:MGPI) is even less popular than TGP. Hedge funds dodged a bullet by taking a bearish stance towards MGPI. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MGPI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MGPI investors were disappointed as the stock returned -24.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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

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