Here is What Hedge Funds Think About MSA Safety Incorporated (MSA)

Asma UL Husna

Wed, Oct 23, 2019, 6:13 PM

Is MSA Safety Incorporated (NYSE:MSA) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

MSA Safety Incorporated (NYSE:MSA) has experienced a decrease in hedge fund interest of late. Our calculations also showed that MSA isn't among the 30 most popular stocks among hedge funds (view the video below).

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are tons of tools market participants put to use to evaluate stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top investment managers can outpace the S&P 500 by a healthy margin (see the details here).

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a peek at the new hedge fund action regarding MSA Safety Incorporated (NYSE:MSA).

What does smart money think about MSA Safety Incorporated (NYSE:MSA)?

At Q2's end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MSA over the last 16 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Among these funds, AQR Capital Management held the most valuable stake in MSA Safety Incorporated (NYSE:MSA), which was worth $45.3 million at the end of the second quarter. On the second spot was Royce & Associates which amassed $12.2 million worth of shares. Moreover, GLG Partners, Renaissance Technologies, and Citadel Investment Group were also bullish on Mine Safety Appliances (NYSE:MSA), allocating a large percentage of their portfolios to this stock.

Judging by the fact that MSA Safety Incorporated (NYSE:MSA) has faced bearish sentiment from hedge fund managers, we can see that there lies a certain "tier" of hedgies who sold off their positions entirely by the end of the second quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dropped the biggest investment of the "upper crust" of funds monitored by Insider Monkey, valued at an estimated $1.7 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also dropped its stock, about $1 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds by the end of the second quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as MSA Safety Incorporated (NYSE:MSA) but similarly valued. We will take a look at MasTec, Inc. (NYSE:MTZ), Brunswick Corporation (NYSE:BC), Strategic Education, Inc. (NASDAQ:STRA), and Clean Harbors Inc (NYSE:CLH). This group of stocks' market caps resemble MSA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MTZ,28,452832,0 BC,30,540469,3 STRA,13,208173,0 CLH,27,413470,0 Average,24.5,403736,0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $404 million. That figure was $79 million in MSA's case. Brunswick Corporation (NYSE:BC) is the most popular stock in this table. On the other hand Strategic Education, Inc. (NASDAQ:STRA) is the least popular one with only 13 bullish hedge fund positions. MSA Safety Incorporated (NYSE:MSA) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on MSA, though not to the same extent, as the stock returned 4% during the third quarter and outperformed the market.

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

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