Why One Fund Exited a $6 Million MYR Group Stake Last Quarter Amid Stock's 50% Rally

1060 Capital Management fully exited its position in MYR Group (NASDAQ:MYRG) during the third quarter, selling 32,500 shares for an estimated $5.9 million, a transaction representing over 10% of the firm's reportable assets. This strategic divestment by the Denver-based fund occurs despite MYR Group's stock surging over 50% in the past year, nearing its 52-week high, and the company reporting strong Q3 financials including a 7% revenue increase and nearly doubled EBITDA. The move suggests 1060 Capital is reallocating capital from positions where initial catalysts may have played out, prioritizing new opportunities over continued upside in a high-performing asset.

Analysis

Denver-based 1060 Capital Management fully exited its 32,500-share position in MYR Group (NASDAQ:MYRG) during Q3, selling for an estimated $5.9 million. This divestment, representing over 10% of the firm's AUM, signals a strategic reallocation despite MYRG's stock surging 52.6% over the past year, significantly outperforming the S&P 500.

MYR Group reported robust Q3 fundamentals, including a 7% year-over-year revenue increase to $950.4 million, gross margin expansion to 11.8%, and nearly doubled EBITDA at $62.7 million, with net income reaching a record $32.1 million. However, 1060 Capital's move aligns with its strategy of exiting high-conviction positions where initial catalysts are believed to have played out, seeking new opportunities.

With MYRG shares trading near their 52-week high, the implied future upside is increasingly reliant on sustained execution rather than mean reversion. This suggests a higher opportunity cost for investors at current valuations, prompting firms like 1060 Capital to reallocate towards new catalyst-driven bets, as seen with their recent additions and put positions.

Key Decisions for Investors

• Investors should critically evaluate MYR Group's current valuation and future growth catalysts, given a significant institutional exit despite strong recent performance
• Monitor MYR Group's operational execution and project pipeline for sustained growth, as future upside appears contingent on continued strong performance rather than market mean reversion
• Consider the opportunity cost of holding high-performing assets like MYRG at near 52-week highs, potentially reallocating capital to investments with clearer near-term catalysts or more favorable risk-reward profiles