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Mistras (MG) Stock Plunges 77% on Solvency Risk

Bernzott Capital Advisors recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of -32.76% (net) for the quarter, outperforming its benchmark, the Russell 2000 Value Index which returned -35.66% in the same quarter. You should check out Bernzott Capital Advisors top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Bernzott Capital Advisors highlighted a few stocks and Mistras Group Inc. (NYSE:MG) is one of them. Mistras offers technology-enabled asset protection solutions. Year-to-date, MG stock lost 77% and on May 13th it had a closing price of $3.42. Its market cap is of $105.4 million. Here is what Bernzott Capital Advisors said:

“Mistras (MG): MG, a provider of technology-enabled asset protection solutions, derives some 50% of its business from the oil and gas industry. The OPEC / Russia imbroglio cut oil prices in half during March and coronavirus made it impossible for MG to perform services in some areas, crippling it. MG negotiated debt covenants with its bank group, but the leverage and lack of visibility created a solvency concern and we sold in early April.”

In Q3 2019, the number of bullish hedge fund positions on MG stock increased by about 40% from the previous quarter (see the chart here).

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

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