We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Matrix Service Co (NASDAQ:MTRX), and what that likely means for the prospects of the company and its stock.
Matrix Service Co (NASDAQ:MTRX) investors should pay attention to an increase in enthusiasm from smart money lately. There were 15 hedge funds in our database with MTRX holdings at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Waterstone Financial, Inc. (NASDAQ:WSBF), Seres Therapeutics Inc (NASDAQ:MCRB), and NN, Inc. (NASDAQ:NNBR) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
With all of this in mind, let’s review the key action regarding Matrix Service Co (NASDAQ:MTRX).
What have hedge funds been doing with Matrix Service Co (NASDAQ:MTRX)?
Heading into the fourth quarter of 2016, a total of 15 funds tracked by Insider Monkey were bullish on this stock, up from 11 funds at the end of June. By comparison, 11 hedge funds held shares or bullish call options in MTRX heading into this year. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates holds the biggest position in Matrix Service Co (NASDAQ:MTRX) which has a $42.2 million position in the stock. Coming in second is Millennium Management, one of the largest hedge funds in the world, holding a $5.7 million position. Some other members of the smart money that hold long positions comprise Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw, and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.