Hedge Funds Are Selling Magnite Inc. (MGNI)

In this article you are going to find out whether hedge funds think Magnite Inc. (NASDAQ:MGNI) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Magnite Inc. (NASDAQ:MGNI) investors should pay attention to a decrease in support from the world’s most elite money managers lately. Magnite Inc. (NASDAQ:MGNI) was in 25 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 29. There were 29 hedge funds in our database with MGNI positions at the end of the fourth quarter. Our calculations also showed that MGNI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

If you’d ask most market participants, hedge funds are perceived as unimportant, old investment tools of yesteryear. While there are more than 8000 funds in operation at the moment, We look at the masters of this club, approximately 850 funds. These money managers administer bulk of all hedge funds’ total capital, and by keeping track of their first-class picks, Insider Monkey has deciphered numerous investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s go over the key hedge fund action regarding Magnite Inc. (NASDAQ:MGNI).

Do Hedge Funds Think MGNI Is A Good Stock To Buy Now?

At the end of March, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the fourth quarter of 2020. On the other hand, there were a total of 22 hedge funds with a bullish position in MGNI a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Magnite Inc. (NASDAQ:MGNI), which was worth $84.2 million at the end of the fourth quarter. On the second spot was Driehaus Capital which amassed $58.8 million worth of shares. Nine Ten Partners, Citadel Investment Group, and Citadel Investment Group 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 Collaborative Holdings Management allocated the biggest weight to Magnite Inc. (NASDAQ:MGNI), around 13.03% of its 13F portfolio. P.A.W. CAPITAL PARTNERS is also relatively very bullish on the stock, dishing out 7.32 percent of its 13F equity portfolio to MGNI.

Seeing as Magnite Inc. (NASDAQ:MGNI) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few money managers who sold off their full holdings last quarter. Intriguingly, Austin Wiggins Hopper’s AWH Capital dumped the largest position of the 750 funds monitored by Insider Monkey, totaling close to $3.6 million in stock. Florian Kronawitter’s fund, White Square Capital, also dropped its stock, about $1.1 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 4 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Magnite Inc. (NASDAQ:MGNI) but similarly valued. These stocks are Allegro MicroSystems, Inc. (NASDAQ:ALGM), FTI Consulting, Inc. (NYSE:FCN), Stantec Inc. (NYSE:STN), Fisker Inc. (NYSE:FSR), Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI), Marathon Digital Holdings, Inc. (NASDAQ:MARA), and BlackBerry Limited (NYSE:BB). This group of stocks’ market values resemble MGNI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALGM 17 90381 1
FCN 24 520173 -1
STN 9 39824 2
FSR 22 337954 4
SHI 4 14885 -1
MARA 10 197814 2
BB 24 499771 -7
Average 15.7 242972 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.7 hedge funds with bullish positions and the average amount invested in these stocks was $243 million. That figure was $336 million in MGNI’s case. FTI Consulting, Inc. (NYSE:FCN) is the most popular stock in this table. On the other hand Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Magnite Inc. (NASDAQ:MGNI) is more popular among hedge funds. Our overall hedge fund sentiment score for MGNI is 76.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Unfortunately MGNI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MGNI were disappointed as the stock returned -20.2% since the end of the first quarter (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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