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Magna International Inc. (MGA): Hedge Funds Taking Some Chips Off The Table

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Magna International Inc. (NYSE:MGA)?

Is Magna International Inc. (NYSE:MGA) an outstanding investment now? The best stock pickers are becoming less hopeful. The number of long hedge fund bets retreated by 1 in recent months. Our calculations also showed that MGA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). MGA was in 22 hedge funds’ portfolios at the end of the first quarter of 2020. There were 23 hedge funds in our database with MGA positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

According to most shareholders, hedge funds are seen as slow, old financial tools of the past. While there are more than 8000 funds trading at present, Our researchers look at the crème de la crème of this club, around 850 funds. These hedge fund managers watch over most of the hedge fund industry’s total asset base, and by tailing their matchless equity investments, Insider Monkey has figured out numerous investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the latest hedge fund action surrounding Magna International Inc. (NYSE:MGA).

How are hedge funds trading Magna International Inc. (NYSE:MGA)?

Heading into the second quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MGA over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Arrowstreet Capital held the most valuable stake in Magna International Inc. (NYSE:MGA), which was worth $188.9 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $48.7 million worth of shares. D E Shaw, East Side Capital (RR Partners), and Heathbridge Capital Management 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 East Side Capital (RR Partners) allocated the biggest weight to Magna International Inc. (NYSE:MGA), around 5.62% of its 13F portfolio. Heathbridge Capital Management is also relatively very bullish on the stock, earmarking 4.85 percent of its 13F equity portfolio to MGA.

Due to the fact that Magna International Inc. (NYSE:MGA) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there were a few funds who sold off their positions entirely by the end of the first quarter. Interestingly, Javier Velazquez’s Albar Capital dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling close to $3.2 million in stock, and Mike Vranos’s Ellington was right behind this move, as the fund dropped about $0.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 1 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks similar to Magna International Inc. (NYSE:MGA). These stocks are Booz Allen Hamilton Holding Corporation (NYSE:BAH), Masco Corporation (NYSE:MAS), Agnico Eagle Mines Limited (NYSE:AEM), and W.R. Berkley Corporation (NYSE:WRB). This group of stocks’ market caps are closest to MGA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BAH 27 276427 -7
MAS 34 489853 -11
AEM 25 392047 -9
WRB 26 208286 -8
Average 28 341653 -8.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $342 million. That figure was $413 million in MGA’s case. Masco Corporation (NYSE:MAS) is the most popular stock in this table. On the other hand Agnico Eagle Mines Limited (NYSE:AEM) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Magna International Inc. (NYSE:MGA) is even less popular than AEM. Hedge funds clearly dropped the ball on MGA as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on MGA as the stock returned 46.1% so far in the second quarter and outperformed the market by an even larger margin.

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

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