Is Mistras Group, Inc. (MG) Going to Burn These Hedge Funds?

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 Mistras Group, Inc. (NYSE:MG).

Mistras Group, Inc. (NYSE:MG) investors should be aware of a slight increase in support from the world’s most elite money managers recently. Amyris Inc (NASDAQ:AMRS) was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. There were 10 hedge funds in our database with Amyris Inc (NASDAQ:AMRS) positions at the end of the previous quarter. 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 Omega Protein Corporation (NYSE:OME), THL Credit, Inc. (NASDAQ:TCRD), and Corindus Vascular Robotics Inc (NYSEMKT:CVRS) to gather more data points.

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According to most traders, hedge funds are viewed as underperforming, outdated financial tools of the past. While there are over 8000 funds in operation at present, our researchers hone in on the masters of this club, approximately 700 funds. These money managers command bulk of all hedge funds’ total capital, and by watching their top investments, Insider Monkey has come up with many investment strategies that have historically defeated Mr. Market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, we’re going to view the fresh action surrounding Mistras Group, Inc. (NYSE:MG).

Hedge fund activity in Mistras Group, Inc. (NYSE:MG)

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 10% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Rutabaga Capital Management, managed by Peter Schliemann, holds the most valuable position in Mistras Group, Inc. (NYSE:MG). Rutabaga Capital Management has a $17.4 million position in the stock, comprising 2.1% of its 13F portfolio. The second most bullish fund manager is GMT Capital, led by Thomas E. Claugus, holding a $15.4 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other peers that are bullish include D E Shaw, David Steinberg and Eric Udoff’s Marlowe Partners and Israel Englander’s Millennium Management.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Millennium Management initiated the most valuable position in Mistras Group, Inc. (NYSE:MG). Millennium Management had $1.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.2 million investment in the stock during the quarter. The only other fund with a new position in the stock is Joel Greenblatt’s Gotham Asset Management.

Let’s now review hedge fund activity in other stocks similar to Mistras Group, Inc. (NYSE:MG). These stocks are Omega Protein Corporation (NYSE:OME), THL Credit, Inc. (NASDAQ:TCRD), Corindus Vascular Robotics Inc (NYSEMKT:CVRS), and Weight Watchers International, Inc. (NYSE:WTW). All of these stocks’ market caps are closest to Mistras Group, Inc. (NYSE:MG)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OME 11 45632 4
TCRD 7 13625 -2
CVRS 4 62436 0
WTW 14 25517 5

As you can see, these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. Mistras Group has registered an interest from hedge funds above average, and the hedge funds that held long positions amassed $39 million worth of its stock at the end of September. However, the increase in sentiment is smaller than in stocks like Weight Watchers International, or Omega Protein Corporation, which suggests that these two stocks may be better alternatives.