The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Magnite Inc. (NASDAQ:MGNI) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Magnite Inc. (NASDAQ:MGNI) was in 24 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 25. MGNI shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. There were 22 hedge funds in our database with MGNI positions at the end of the first quarter. Our calculations also showed that MGNI isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 financial world there are numerous signals stock market investors can use to assess publicly traded companies. A couple of the most useful signals are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outperform their index-focused peers by a solid amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a glance at the recent hedge fund action regarding Magnite Inc. (NASDAQ:MGNI).
How have hedgies been trading Magnite Inc. (NASDAQ:MGNI)?
At second quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in MGNI a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Nine Ten Partners, managed by Brian Bares, Russell Mollen, and James Bradshaw, holds the number one position in Magnite Inc. (NASDAQ:MGNI). Nine Ten Partners has a $33.1 million position in the stock, comprising 8.3% of its 13F portfolio. The second most bullish fund manager is Driehaus Capital, managed by Richard Driehaus, which holds a $18.1 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism comprise Chuck Royce’s Royce & Associates, Cyrus de Weck’s Portsea Asset Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Portsea Asset Management allocated the biggest weight to Magnite Inc. (NASDAQ:MGNI), around 8.98% of its 13F portfolio. Nine Ten Partners is also relatively very bullish on the stock, earmarking 8.29 percent of its 13F equity portfolio to MGNI.
Consequently, key hedge funds were breaking ground themselves. Nine Ten Partners, managed by Brian Bares, Russell Mollen, and James Bradshaw, created the most outsized position in Magnite Inc. (NASDAQ:MGNI). Nine Ten Partners had $33.1 million invested in the company at the end of the quarter. J. Carlo Cannell’s Cannell Capital also made a $7.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Warren Lammert’s Granite Point Capital, Andrew Kurita’s Kettle Hill Capital Management, and Brian C. Freckmann’s Lyon Street Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Magnite Inc. (NASDAQ:MGNI). We will take a look at Photronics, Inc. (NASDAQ:PLAB), First Foundation Inc (NASDAQ:FFWM), First Bancorp (NASDAQ:FBNC), Fusion Pharmaceuticals Inc. (NASDAQ:FUSN), Forterra, Inc. (NASDAQ:FRTA), NextGen Healthcare, Inc. (NASDAQ:NXGN), and AAR Corp. (NYSE:AIR). This group of stocks’ market values match MGNI’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $136 million in MGNI’s case. Photronics, Inc. (NASDAQ:PLAB) is the most popular stock in this table. On the other hand Forterra, Inc. (NASDAQ:FRTA) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Magnite Inc. (NASDAQ:MGNI) is more popular among hedge funds. Our overall hedge fund sentiment score for MGNI is 85.8. 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 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 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Unfortunately MGNI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MGNI were disappointed as the stock returned -3.1% since the end of the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.