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Is MGIC Investment Corporation (MTG) Going to Burn These Hedge Funds?

We can judge whether MGIC Investment Corporation (NYSE:MTG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.

MGIC Investment Corporation (NYSE:MTG) has experienced an increase in support from the world’s most elite money managers lately. MTG was in 35 hedge funds’ portfolios at the end of the second quarter of 2019. There were 32 hedge funds in our database with MTG positions at the end of the previous quarter. Our calculations also showed that MTG isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most shareholders, hedge funds are seen as worthless, outdated investment vehicles of the past. While there are greater than 8000 funds trading at present, Our researchers look at the moguls of this group, approximately 750 funds. Most estimates calculate that this group of people watch over the majority of the hedge fund industry’s total asset base, and by tailing their finest stock picks, Insider Monkey has found a number of investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

AQR CAPITAL MANAGEMENT

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the latest hedge fund action encompassing MGIC Investment Corporation (NYSE:MTG).

What have hedge funds been doing with MGIC Investment Corporation (NYSE:MTG)?

At Q2’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MTG over the last 16 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

MTG_oct2019

The largest stake in MGIC Investment Corporation (NYSE:MTG) was held by Renaissance Technologies, which reported holding $83.3 million worth of stock at the end of March. It was followed by Point72 Asset Management with a $80.1 million position. Other investors bullish on the company included Millennium Management, GLG Partners, and AQR Capital Management.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Mark Asset Management, managed by Morris Mark, created the biggest position in MGIC Investment Corporation (NYSE:MTG). Mark Asset Management had $3 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $1.4 million position during the quarter. The following funds were also among the new MTG investors: Michael Gelband’s ExodusPoint Capital, Peter Seuss’s Prana Capital Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as MGIC Investment Corporation (NYSE:MTG) but similarly valued. These stocks are Teladoc Health Inc (NYSE:TDOC), Nordstrom, Inc. (NYSE:JWN), Black Hills Corporation (NYSE:BKH), and Kinross Gold Corporation (NYSE:KGC). This group of stocks’ market caps are closest to MTG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TDOC 18 172338 1
JWN 27 158315 1
BKH 16 155183 -2
KGC 18 311730 -1
Average 19.75 199392 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $199 million. That figure was $492 million in MTG’s case. Nordstrom, Inc. (NYSE:JWN) is the most popular stock in this table. On the other hand Black Hills Corporation (NYSE:BKH) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks MGIC Investment Corporation (NYSE:MTG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MTG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MTG were disappointed as the stock returned -3.8% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.

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

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