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Did Hedge Funds Make The Right Call On Mantech International Corp (MANT) ?

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Mantech International Corp (NASDAQ:MANT) and determine whether hedge funds had an edge regarding this stock.

Mantech International Corp (NASDAQ:MANT) investors should be aware of a decrease in support from the world’s most elite money managers lately. MANT was in 17 hedge funds’ portfolios at the end of the first quarter of 2020. There were 23 hedge funds in our database with MANT holdings at the end of the previous quarter. Our calculations also showed that MANT 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.

According to most shareholders, hedge funds are viewed as worthless, outdated investment tools of yesteryear. While there are over 8000 funds in operation today, Our experts choose to focus on the aristocrats of this club, about 850 funds. It is estimated that this group of investors administer the majority of the smart money’s total asset base, and by monitoring their finest stock picks, Insider Monkey has uncovered numerous investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America 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. With all of this in mind we’re going to take a glance at the latest hedge fund action encompassing Mantech International Corp (NASDAQ:MANT).

What have hedge funds been doing with Mantech International Corp (NASDAQ:MANT)?

At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MANT over the last 18 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

The largest stake in Mantech International Corp (NASDAQ:MANT) was held by Marshall Wace LLP, which reported holding $10.1 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $7 million position. Other investors bullish on the company included Two Sigma Advisors, Renaissance Technologies, and Horizon Asset Management. In terms of the portfolio weights assigned to each position Algert Coldiron Investors allocated the biggest weight to Mantech International Corp (NASDAQ:MANT), around 0.38% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.34 percent of its 13F equity portfolio to MANT.

Since Mantech International Corp (NASDAQ:MANT) has faced falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of money managers who sold off their entire stakes by the end of the first quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising close to $1.4 million in stock. Mika Toikka’s fund, AlphaCrest Capital Management, also dumped its stock, about $1.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 6 funds by the end of the first quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Mantech International Corp (NASDAQ:MANT) but similarly valued. These stocks are Crane Co. (NYSE:CR), White Mountains Insurance Group Ltd (NYSE:WTM), Starwood Property Trust, Inc. (NYSE:STWD), and Performance Food Group Company (NYSE:PFGC). This group of stocks’ market caps are similar to MANT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CR 26 197568 3
WTM 16 133496 0
STWD 23 96766 2
PFGC 29 189889 -2
Average 23.5 154430 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $32 million in MANT’s case. Performance Food Group Company (NYSE:PFGC) is the most popular stock in this table. On the other hand White Mountains Insurance Group Ltd (NYSE:WTM) is the least popular one with only 16 bullish hedge fund positions. Mantech International Corp (NASDAQ:MANT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 and surpassed the market by 17.1 percentage points. Unfortunately MANT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MANT investors were disappointed as the stock returned -6.5% since Q1 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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