At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not MiX Telematics Limited (NYSE:MIXT) makes for a good investment right now.
Is MiX Telematics Limited (NYSE:MIXT) a buy here? Hedge funds were taking a bearish view. The number of long hedge fund positions shrunk by 1 lately. MiX Telematics Limited (NYSE:MIXT) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 12. Our calculations also showed that MIXT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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 analyze the key hedge fund action surrounding MiX Telematics Limited (NYSE:MIXT).
Do Hedge Funds Think MIXT Is A Good Stock To Buy Now?
At the end of March, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards MIXT over the last 23 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in MiX Telematics Limited (NYSE:MIXT), which was worth $9.2 million at the end of the fourth quarter. On the second spot was Bandera Partners which amassed $7.4 million worth of shares. Arrowstreet Capital, Millennium Management, and D E Shaw 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 Bandera Partners allocated the biggest weight to MiX Telematics Limited (NYSE:MIXT), around 2.92% of its 13F portfolio. G2 Investment Partners Management is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to MIXT.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Polar Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified MIXT as a viable investment and initiated a position in the stock.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as MiX Telematics Limited (NYSE:MIXT) but similarly valued. We will take a look at Artesian Resources Corporation (NASDAQ:ARTNA), Fluent, Inc. (NASDAQ:FLNT), iBio, Inc. (NYSE:IBIO), Laird Superfood, Inc. (NYSE:LSF), Codiak BioSciences, Inc. (NASDAQ:CDAK), Apyx Medical Corporation (NASDAQ:APYX), and Paratek Pharmaceuticals Inc (NASDAQ:PRTK). All of these stocks’ market caps match MIXT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.6 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $19 million in MIXT’s case. Fluent, Inc. (NASDAQ:FLNT) is the most popular stock in this table. On the other hand Artesian Resources Corporation (NASDAQ:ARTNA) is the least popular one with only 2 bullish hedge fund positions. MiX Telematics Limited (NYSE:MIXT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MIXT is 41.2. 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 19.3% in 2021 through June 25th and beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on MIXT, though not to the same extent, as the stock returned 8.8% since the end of Q1 (through June 25th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.