Is MTSC A Good Stock To Buy Now?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards MTS Systems Corporation (NASDAQ:MTSC).

Is MTSC a good stock to buy now? Hedge funds were turning less bullish. The number of long hedge fund positions retreated by 1 recently. MTS Systems Corporation (NASDAQ:MTSC) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 20. Our calculations also showed that MTSC 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.

In the eyes of most shareholders, hedge funds are viewed as worthless, old financial vehicles of the past. While there are more than 8000 funds with their doors open at the moment, Our experts look at the crème de la crème of this club, approximately 850 funds. These hedge fund managers oversee the majority of the smart money’s total capital, and by following their highest performing equity investments, Insider Monkey has spotted numerous investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Gavin Saitowitz of Prelude Capital

Gavin Saitowitz of Prelude Capital

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. With all of this in mind let’s take a peek at the recent hedge fund action regarding MTS Systems Corporation (NASDAQ:MTSC).

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

At the end of September, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the second quarter of 2020. On the other hand, there were a total of 19 hedge funds with a bullish position in MTSC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MTSC A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ariel Investments, managed by John W. Rogers, holds the most valuable position in MTS Systems Corporation (NASDAQ:MTSC). Ariel Investments has a $10.5 million position in the stock, comprising 0.2% of its 13F portfolio. On Ariel Investments’s heels is D E Shaw, managed by D. E. Shaw, which holds a $2.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions consist of Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to MTS Systems Corporation (NASDAQ:MTSC), around 0.41% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, dishing out 0.15 percent of its 13F equity portfolio to MTSC.

Seeing as MTS Systems Corporation (NASDAQ:MTSC) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few fund managers who were dropping their full holdings last quarter. Intriguingly, Dov Gertzulin’s DG Capital Management said goodbye to the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $1.8 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also sold off its stock, about $0.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to MTS Systems Corporation (NASDAQ:MTSC). We will take a look at Cambridge Bancorp (NASDAQ:CATC), RedHill Biopharma Ltd (NASDAQ:RDHL), PolyMet Mining Corp. (NYSE:PLM), Kimbell Royalty Partners (NYSE:KRP), Bicycle Therapeutics plc (NASDAQ:BCYC), dMY Technology Group, Inc. (NYSE:DMYT), and Century Bancorp, Inc. (NASDAQ:CNBKA). This group of stocks’ market valuations are closest to MTSC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CATC 5 13789 -2
RDHL 3 1617 1
PLM 3 1600 -1
KRP 4 3816 1
BCYC 7 73961 1
DMYT 26 82516 4
CNBKA 4 14693 1
Average 7.4 27427 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.4 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $25 million in MTSC’s case. dMY Technology Group, Inc. (NYSE:DMYT) is the most popular stock in this table. On the other hand RedHill Biopharma Ltd (NASDAQ:RDHL) is the least popular one with only 3 bullish hedge fund positions. MTS Systems Corporation (NASDAQ:MTSC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTSC is 48.9. 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. Hedge funds were also right about betting on MTSC as the stock returned 101.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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