Magna International Inc. (USA) (MGA): Are Hedge Funds Right About This Stock?

Magna International Inc. (USA) (NYSE:MGA) investors should be aware of an increase in hedge fund interest in recent months.

If you’d ask most investors, hedge funds are seen as unimportant, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading at present, we hone in on the bigwigs of this group, close to 450 funds. It is widely believed that this group has its hands on the lion’s share of the hedge fund industry’s total asset base, and by keeping an eye on their highest performing investments, we have revealed a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as beneficial, optimistic insider trading activity is another way to parse down the financial markets. Just as you’d expect, there are a number of stimuli for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this method if shareholders understand where to look (learn more here).

Keeping this in mind, let’s take a peek at the recent action surrounding Magna International Inc. (USA) (NYSE:MGA).

Hedge fund activity in Magna International Inc. (USA) (NYSE:MGA)

At the end of the first quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of 33% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully.

According to our comprehensive database, Daniel Bubis’s Tetrem Capital Management had the most valuable position in Magna International Inc. (USA) (NYSE:MGA), worth close to $99 million, accounting for 3% of its total 13F portfolio. On Tetrem Capital Management’s heels is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $25.6 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include Matthew Hulsizer’s PEAK6 Capital Management, D. E. Shaw’s D E Shaw and Eric Sprott’s Sprott Asset Management.

Now, some big names were breaking ground themselves. Hutchin Hill Capital, managed by Neil Chriss, created the largest position in Magna International Inc. (USA) (NYSE:MGA). Hutchin Hill Capital had 4.8 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also made a $1.1 million investment in the stock during the quarter. The following funds were also among the new MGA investors: Andy Redleaf’s Whitebox Advisors and David Costen Haley’s HBK Investments.

How have insiders been trading Magna International Inc. (USA) (NYSE:MGA)?

Insider buying is best served when the company in focus has experienced transactions within the past half-year. Over the latest half-year time period, Magna International Inc. (USA) (NYSE:MGA) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

With the returns exhibited by Insider Monkey’s tactics, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Magna International Inc. (USA) (NYSE:MGA) is an important part of this process.

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