Is Moneygram International Inc (MGI) Going to Burn These Hedge Funds?

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 Moneygram International Inc (NYSE:MGI) makes for a good investment right now.

Is Moneygram International Inc (NYSE:MGI) the right investment to pursue these days? The smart money was becoming more confident. The number of long hedge fund bets inched up by 3 lately. Moneygram International Inc (NYSE:MGI) was in 21 hedge funds’ portfolios at the end of March. The all time high for this statistic is 23. Our calculations also showed that MGI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 18 hedge funds in our database with MGI positions at the end of the fourth quarter.

According to most stock holders, hedge funds are viewed as slow, outdated financial tools of the past. While there are greater than 8000 funds with their doors open at present, Our experts look at the crème de la crème of this group, around 850 funds. These hedge fund managers control bulk of all hedge funds’ total asset base, and by keeping track of their highest performing investments, Insider Monkey has come up with several investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Nick Thakore of Diametric Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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 we’re going to go over the key hedge fund action encompassing Moneygram International Inc (NYSE:MGI).

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

At Q1’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in MGI a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Is MGI A Good Stock To Buy?

More specifically, Renaissance Technologies was the largest shareholder of Moneygram International Inc (NYSE:MGI), with a stake worth $18.2 million reported as of the end of March. Trailing Renaissance Technologies was Engle Capital, which amassed a stake valued at $16.2 million. Portolan Capital Management, Marshall Wace LLP, and Citadel Investment Group 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 Engle Capital allocated the biggest weight to Moneygram International Inc (NYSE:MGI), around 2.46% of its 13F portfolio. AWH Capital is also relatively very bullish on the stock, earmarking 1.95 percent of its 13F equity portfolio to MGI.

As aggregate interest increased, some big names have been driving this bullishness. Archon Capital Management, managed by Constantinos J. Christofilis, initiated the most valuable position in Moneygram International Inc (NYSE:MGI). Archon Capital Management had $3.9 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1 million investment in the stock during the quarter. The other funds with new positions in the stock are Nick Thakore’s Diametric Capital, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), and Matthew L Pinz’s Pinz Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Moneygram International Inc (NYSE:MGI) but similarly valued. We will take a look at Independent Bank Corporation (NASDAQ:IBCP), Amalgamated Bank (NASDAQ:AMAL), Fly Leasing Ltd (NYSE:FLY), Waterstone Financial, Inc. (NASDAQ:WSBF), Sierra Metals Inc. (NYSE:SMTS), GreenPower Motor Company Inc. (NASDAQ:GP), and Global Ship Lease, Inc. (NYSE:GSL). All of these stocks’ market caps match MGI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IBCP 12 41998 -2
AMAL 9 45173 1
FLY 18 79381 9
WSBF 10 77054 -2
SMTS 8 12731 4
GP 4 2317 0
GSL 11 48076 9
Average 10.3 43819 2.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.3 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $93 million in MGI’s case. Fly Leasing Ltd (NYSE:FLY) is the most popular stock in this table. On the other hand GreenPower Motor Company Inc. (NASDAQ:GP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Moneygram International Inc (NYSE:MGI) is more popular among hedge funds. Our overall hedge fund sentiment score for MGI is 85.4. 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 returned 23.8% in 2021 through July 16th but still managed to beat the market by 7.7 percentage points. Hedge funds were also right about betting on MGI as the stock returned 56.3% since the end of March (through 7/16) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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