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.
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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.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Neil Chriss’ Hutchin Hill Capital established the most valuable position in Matrix Service Co (NASDAQ:MTRX). Hutchin Hill Capital had $0.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.3 million investment in the stock during the quarter. The following funds were also among the new MTRX investors: Matthew Tewksbury’s Stevens Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s go over hedge fund activity in other stocks similar to Matrix Service Co (NASDAQ:MTRX). We will take a look at Waterstone Financial, Inc. (NASDAQ:WSBF), Seres Therapeutics Inc (NASDAQ:MCRB), NN, Inc. (NASDAQ:NNBR), and First Financial Corp (NASDAQ:THFF). This group of stocks’ market valuations match MTRX’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 10 investors with bullish positions and the average amount invested in these stocks was $41 million. That figure was $68 million in MTRX’s case. Waterstone Financial, Inc. (NASDAQ:WSBF) is the most popular stock in this table. On the other hand First Financial Corp (NASDAQ:THFF) is the least popular one with only five bullish hedge fund positions. Matrix Service Co (NASDAQ:MTRX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Waterstone Financial, Inc. (NASDAQ:WSBF) might be a better candidate to consider taking a long position in.