Should You Avoid MTS Systems Corporation (MTSC)?

Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that dumped their entire stakes in the stock during the third quarter. Intriguingly, D. E. Shaw’s D E Shaw dumped the biggest stake of all the hedgies followed by Insider Monkey, totaling close to $1.5 million in stock. Cliff Asness’ fund, AQR Capital Management, also cut its stock, about $0.9 million worth.

Let’s also examine hedge fund activity in other stocks similar to MTS Systems Corporation (NASDAQ:MTSC). These stocks are FormFactor, Inc. (NASDAQ:FORM), Tailored Brands Inc (NYSE:TLRD), Raptor Pharmaceutical Corp. (NASDAQ:RPTP), and Bankrate Inc (NYSE:RATE). This group of stocks’ market values match MTSC’s market value.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $127 million. That figure was $150 million in MTSC’s case. Tailored Brands Inc (NYSE:TLRD) is the most popular stock in this table. On the other hand FormFactor, Inc. (NASDAQ:FORM) is the least popular one with only 16 bullish hedge fund positions. MTS Systems Corporation (NASDAQ:MTSC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TLRD might be a better candidate to consider taking a long position in.

Disclosure: None