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Did Hedge Funds Make The Right Call On Manhattan Associates, Inc. (MANH)?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Manhattan Associates, Inc. (NASDAQ:MANH) at the end of the first quarter and determine whether the smart money was really smart about this stock.

Is Manhattan Associates, Inc. (NASDAQ:MANH) going to take off soon? Money managers were becoming less hopeful. The number of long hedge fund bets went down by 4 recently. Our calculations also showed that MANH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are a lot of indicators stock traders employ to value publicly traded companies. Two of the most innovative indicators are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top money managers can outpace the market by a superb amount (see the details here).

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind let’s go over the fresh hedge fund action regarding Manhattan Associates, Inc. (NASDAQ:MANH).

What does smart money think about Manhattan Associates, Inc. (NASDAQ:MANH)?

At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MANH over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MANH A Good Stock To Buy?

The largest stake in Manhattan Associates, Inc. (NASDAQ:MANH) was held by AQR Capital Management, which reported holding $41.3 million worth of stock at the end of September. It was followed by Royce & Associates with a $35 million position. Other investors bullish on the company included RGM Capital, Renaissance Technologies, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position RGM Capital allocated the biggest weight to Manhattan Associates, Inc. (NASDAQ:MANH), around 2.51% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.48 percent of its 13F equity portfolio to MANH.

Due to the fact that Manhattan Associates, Inc. (NASDAQ:MANH) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of funds that slashed their entire stakes last quarter. Interestingly, Israel Englander’s Millennium Management said goodbye to the largest investment of all the hedgies followed by Insider Monkey, valued at an estimated $12.5 million in stock. Sander Gerber’s fund, Hudson Bay Capital Management, also dumped its stock, about $4.5 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 4 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Manhattan Associates, Inc. (NASDAQ:MANH) but similarly valued. These stocks are LG Display Co Ltd. (NYSE:LPL), Nevro Corp (NYSE:NVRO), B2Gold Corp (NYSE:BTG), and Nektar Therapeutics (NASDAQ:NKTR). This group of stocks’ market values are similar to MANH’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LPL 4 4761 1
NVRO 31 694464 -2
BTG 19 228596 2
NKTR 17 198202 -9
Average 17.75 281506 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $282 million. That figure was $200 million in MANH’s case. Nevro Corp (NYSE:NVRO) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 4 bullish hedge fund positions. Manhattan Associates, Inc. (NASDAQ:MANH) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th but still beat the market by 17.1 percentage points. Hedge funds were also right about betting on MANH as the stock returned 97.3% since Q1 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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