Pennant and Luxor Boost Stakes in Manitowoc Company; Does Market Undervalue the Company?

We consider hedge fund sentiment an important part of a stock’s analysis because it can provide some insights about the smart money’s opinion about a company. Moreover, Manitowoc falls under the terms of our small-cap strategy, which showed that 15 most popular small-cap ideas among a pool of 700 hedge funds can beat the market by a wide margin. Our strategy has returned 123% since August 2012 and outperformed the broader indices by around 65 percentage points (see more details here). In this way, even though the stock lost some ground in the past months, it seems like the investment will reward the investors once the spin-off is completed.

The aforementioned Carl Icahn and Relational Investors were among the largest shareholders of the company in our database. Icahn held 10.58 million shares at the end of March, while Relational owned 6.69 million shares. In addition, another large shareholder of Manitowoc Company Inc (NYSE:MTW) is Larry Robbins’ Glenview Capital, which raised its stake in June to 9.61 million shares and changed the nature of its position to activist, although it has not disclosed any moves regarding the company.

With this in mind, taking into account the latest increases to their stakes in Manitowoc Company Inc (NYSE:MTW) by Luxor and Pennant, and the overall bullish sentiment from hedge funds, we consider that the market has not discovered the company’s potential and significantly undervalues it by focusing on its financial results, which are affected by external economic factors, among other things.

Disclosure: none