Should You Avoid MGP Ingredients Inc (MGPI)?

Due to the fact that MGP Ingredients Inc (NASDAQ:MGPI) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedgies who were dropping their entire stakes by the end of the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group dumped the largest stake of all the hedgies followed by Insider Monkey, totaling about $0.4 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund said goodbye to about $0.4 million worth of MGPI shares. These transactions are important to note, as total hedge fund interest was cut by 1 fund by the end of the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as MGP Ingredients Inc (NASDAQ:MGPI) but similarly valued. We will take a look at Tangoe Inc (NASDAQ:TNGO), SurModics, Inc. (NASDAQ:SRDX), Fortuna Silver Mines Inc. (NYSE:FSM), and EndoChoice Holdings Inc (NYSE:GI). This group of stocks’ market caps are similar to MGPI’s market cap.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $9 million in MGPI’s case, a negative sign. SurModics, Inc. (NASDAQ:SRDX) is the most popular stock in this table, while EndoChoice Holdings Inc (NYSE:GI) is at the other end of the specter with only 9 bullish hedge fund positions. Compared to these stocks MGP Ingredients Inc (NASDAQ:MGPI) is even less popular than GI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.