Do Hedge Funds Love Minerals Technologies Inc (MTX)?

Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Minerals Technologies Inc (NYSE:MTX) .

Minerals Technologies Inc (NYSE:MTX) was in 17 hedge funds’ portfolios at the end of the third quarter of 2016. MTX investors should be aware of an increase in hedge fund sentiment lately. There were 16 hedge funds in our database with MTX positions at the end of the previous quarter. At the end of this article we will also compare MTX to other stocks including Sanmina Corp (NASDAQ:SANM), On Assignment, Inc. (NYSE:ASGN), and Novavax, Inc. (NASDAQ:NVAX) to get a better sense of its popularity.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

Keeping this in mind, let’s take a gander at the key action surrounding Minerals Technologies Inc (NYSE:MTX).

Hedge fund activity in Minerals Technologies Inc (NYSE:MTX)

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, up 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MTX over the last 5 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the largest position in Minerals Technologies Inc (NYSE:MTX). According to regulatory filings, the fund has a $78.6 million position in the stock, comprising 0.5% of its 13F portfolio. The second largest stake is held by Cliff Asness of AQR Capital Management, with a $30.9 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish include Mario Gabelli’s GAMCO Investors, Joel Greenblatt’s Gotham Asset Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Consequently, key hedge funds were breaking ground themselves. PEAK6 Capital Management, led by Matthew Hulsizer, created the most valuable call position in Minerals Technologies Inc (NYSE:MTX) worth approximately $0.4 million at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.4 million investment in the stock during the quarter. The following funds were also among the new MTX investors: Phil Frohlich’s Prescott Group Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Minerals Technologies Inc (NYSE:MTX) but similarly valued. These stocks are Sanmina Corp (NASDAQ:SANM), On Assignment, Inc. (NYSE:ASGN), Novavax, Inc. (NASDAQ:NVAX), and Mine Safety Appliances (NYSE:MSA). This group of stocks’ market caps are similar to MTX’s market cap.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $167 million in MTX’s case. Sanmina Corp (NASDAQ:SANM) is the most popular stock in this table. On the other hand Mine Safety Appliances (NYSE:MSA) is the least popular one with only 10 bullish hedge fund positions. Minerals Technologies Inc (NYSE:MTX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SANM might be a better candidate to consider taking a long position in.

Disclosure: none.