Did Hedge Funds Make The Right Call On Mettler-Toledo International Inc. (MTD) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtMettler-Toledo International Inc. (NYSE:MTD) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Mettler-Toledo International Inc. (NYSE:MTD) was in 31 hedge funds’ portfolios at the end of the first quarter of 2020. MTD has experienced an increase in hedge fund sentiment lately. There were 29 hedge funds in our database with MTD positions at the end of the previous quarter. Our calculations also showed that MTD 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Richard Chilton of Chilton Investment Company

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. With all of this in mind let’s review the latest hedge fund action regarding Mettler-Toledo International Inc. (NYSE:MTD).

How have hedgies been trading Mettler-Toledo International Inc. (NYSE:MTD)?

At the end of the first quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in MTD a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MTD A Good Stock To Buy?

More specifically, Impax Asset Management was the largest shareholder of Mettler-Toledo International Inc. (NYSE:MTD), with a stake worth $95.6 million reported as of the end of September. Trailing Impax Asset Management was AQR Capital Management, which amassed a stake valued at $95.5 million. Renaissance Technologies, Chilton Investment Company, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Chilton Investment Company allocated the biggest weight to Mettler-Toledo International Inc. (NYSE:MTD), around 3.18% of its 13F portfolio. Chiron Investment Management is also relatively very bullish on the stock, setting aside 1.67 percent of its 13F equity portfolio to MTD.

As industrywide interest jumped, specific money managers were breaking ground themselves. Echo Street Capital Management, managed by Greg Poole, created the largest position in Mettler-Toledo International Inc. (NYSE:MTD). Echo Street Capital Management had $27.7 million invested in the company at the end of the quarter. Robert Joseph Caruso’s Select Equity Group also made a $25 million investment in the stock during the quarter. The other funds with brand new MTD positions are Ryan Caldwell’s Chiron Investment Management, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Lee Ainslie’s Maverick Capital.

Let’s go over hedge fund activity in other stocks similar to Mettler-Toledo International Inc. (NYSE:MTD). We will take a look at LyondellBasell Industries NV (NYSE:LYB), AMETEK, Inc. (NYSE:AME), Royal Bank of Scotland Group plc (NYSE:RBS), and Palo Alto Networks Inc (NYSE:PANW). All of these stocks’ market caps are similar to MTD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LYB 35 474610 -5
AME 33 639873 1
RBS 5 13271 0
PANW 47 2721801 0
Average 30 962389 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $962 million. That figure was $617 million in MTD’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand Royal Bank of Scotland Group plc (NYSE:RBS) is the least popular one with only 5 bullish hedge fund positions. Mettler-Toledo International Inc. (NYSE:MTD) 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. 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately MTD wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MTD were disappointed as the stock returned 16.7% during the same time period 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 many of these stocks already outperformed the market so far this year.

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