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Hedge Funds Have Never Been Less Bullish On Moneygram International Inc (MGI)

In this article we will check out the progression of hedge fund sentiment towards Moneygram International Inc (NASDAQ:MGI) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Moneygram International Inc (NASDAQ:MGI) a buy here? The best stock pickers are turning less bullish. The number of long hedge fund bets fell by 6 recently. Our calculations also showed that MGI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a gander at the key hedge fund action surrounding Moneygram International Inc (NASDAQ:MGI).

Hedge fund activity in Moneygram International Inc (NASDAQ:MGI)

At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -43% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in MGI 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.

According to Insider Monkey’s hedge fund database, Beach Point Capital Management, managed by Carl Goldsmith and Scott Klein, holds the number one position in Moneygram International Inc (NASDAQ:MGI). Beach Point Capital Management has a $2.2 million position in the stock, comprising 2.1% of its 13F portfolio. The second most bullish fund manager is Claes Fornell of CSat Investment Advisory, with a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers with similar optimism consist of Ken Griffin’s Citadel Investment Group, Mario Gabelli’s GAMCO Investors and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Beach Point Capital Management allocated the biggest weight to Moneygram International Inc (NASDAQ:MGI), around 2.05% of its 13F portfolio. CSat Investment Advisory is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to MGI.

Because Moneygram International Inc (NASDAQ:MGI) has witnessed falling interest from the aggregate hedge fund industry, we can see that there is a sect of funds that decided to sell off their full holdings heading into Q4. It’s worth mentioning that Anthony Joseph Vaccarino’s North Fourth Asset Management sold off the biggest stake of the 750 funds followed by Insider Monkey, worth close to $1.1 million in stock. Jose Fernandez’s fund, Stepstone Group, also said goodbye to its stock, about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 6 funds heading into Q4.

Let’s now review hedge fund activity in other stocks similar to Moneygram International Inc (NASDAQ:MGI). We will take a look at Old Point Financial Corporation (NASDAQ:OPOF), Ultralife Corp. (NASDAQ:ULBI), Severn Bancorp Inc (NASDAQ:SVBI), and Five Prime Therapeutics Inc (NASDAQ:FPRX). This group of stocks’ market values resemble MGI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OPOF 3 4530 -1
ULBI 3 1619 0
SVBI 4 11769 0
FPRX 16 29194 -3
Average 6.5 11778 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $3 million in MGI’s case. Five Prime Therapeutics Inc (NASDAQ:FPRX) is the most popular stock in this table. On the other hand Old Point Financial Corporation (NASDAQ:OPOF) is the least popular one with only 3 bullish hedge fund positions. Moneygram International Inc (NASDAQ:MGI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but still beat the market by 14.8 percentage points. Hedge funds were also right about betting on MGI as the stock returned 144.3% in Q2 (through June 17th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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