Is MGI A Good Stock To Buy Now?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Moneygram International Inc (NASDAQ:MGI).

Is MGI a good stock to buy now? Moneygram International Inc (NASDAQ:MGI) was in 9 hedge funds’ portfolios at the end of September. The all time high for this statistics is 23. MGI investors should be aware of an increase in activity from the world’s largest hedge funds of late. There were 8 hedge funds in our database with MGI holdings at the end of June. Our calculations also showed that MGI isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Cliff Asness of AQR Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we’re going to take a look at the key hedge fund action regarding Moneygram International Inc (NASDAQ:MGI).

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

At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in MGI a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Among these funds, Citadel Investment Group held the most valuable stake in Moneygram International Inc (NASDAQ:MGI), which was worth $6.6 million at the end of the third quarter. On the second spot was Beach Point Capital Management which amassed $4.6 million worth of shares. Arrowstreet Capital, Engineers Gate Manager, and CSat Investment Advisory 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 Beach Point Capital Management allocated the biggest weight to Moneygram International Inc (NASDAQ:MGI), around 2.04% of its 13F portfolio. CSat Investment Advisory is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to MGI.

Now, some big names have been driving this bullishness. CSat Investment Advisory, managed by Claes Fornell, initiated the biggest position in Moneygram International Inc (NASDAQ:MGI). CSat Investment Advisory had $0.3 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also made a $0.1 million investment in the stock during the quarter.

Let’s check out hedge fund activity in other stocks similar to Moneygram International Inc (NASDAQ:MGI). We will take a look at Tilly’s Inc (NYSE:TLYS), OptiNose, Inc. (NASDAQ:OPTN), SWK Holdings Corporation (NASDAQ:SWKH), Contango Oil & Gas Company (NYSE:MCF), Nabors Industries Ltd. (NYSE:NBR), Mustang Bio, Inc. (NASDAQ:MBIO), and LSI Industries, Inc. (NASDAQ:LYTS). This group of stocks’ market values match MGI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TLYS 14 26711 -1
OPTN 11 22447 2
SWKH 3 143747 -1
MCF 3 2678 0
NBR 12 13624 -3
MBIO 13 17492 0
LYTS 9 23658 3
Average 9.3 35765 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $16 million in MGI’s case. Tilly’s Inc (NYSE:TLYS) is the most popular stock in this table. On the other hand SWK Holdings Corporation (NASDAQ:SWKH) is the least popular one with only 3 bullish hedge fund positions. Moneygram International Inc (NASDAQ:MGI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MGI is 45. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on MGI as the stock returned 125.4% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

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