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Hedge Funds Are Crazy About Mettler-Toledo International Inc. (MTD)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Mettler-Toledo International Inc. (NYSE:MTD) based on that data.

Is Mettler-Toledo International Inc. (NYSE:MTD) a healthy stock for your portfolio? Money managers are getting more optimistic. The number of long hedge fund positions rose by 2 lately. Our calculations also showed that MTD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). MTD was in 22 hedge funds’ portfolios at the end of the third quarter of 2019. There were 20 hedge funds in our database with MTD holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

CHILTON INVESTMENT COMPANY

Richard Chilton of Chilton Investment Company

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s review the recent hedge fund action encompassing Mettler-Toledo International Inc. (NYSE:MTD).

What have hedge funds been doing with Mettler-Toledo International Inc. (NYSE:MTD)?

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MTD over the last 17 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

The largest stake in Mettler-Toledo International Inc. (NYSE:MTD) was held by AQR Capital Management, which reported holding $71.1 million worth of stock at the end of September. It was followed by Chilton Investment Company with a $65.4 million position. Other investors bullish on the company included Arrowstreet Capital, GLG Partners, and Impax Asset Management. In terms of the portfolio weights assigned to each position Opus Point Partners Management allocated the biggest weight to Mettler-Toledo International Inc. (NYSE:MTD), around 4.12% of its 13F portfolio. Chilton Investment Company is also relatively very bullish on the stock, earmarking 2.18 percent of its 13F equity portfolio to MTD.

Now, specific money managers have jumped into Mettler-Toledo International Inc. (NYSE:MTD) headfirst. Impax Asset Management, managed by Ian Simm, initiated the most valuable position in Mettler-Toledo International Inc. (NYSE:MTD). Impax Asset Management had $34.2 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $16.1 million position during the quarter. The other funds with brand new MTD positions are Paul Marshall and Ian Wace’s Marshall Wace, Israel Englander’s Millennium Management, and Matthew Tewksbury’s Stevens Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Mettler-Toledo International Inc. (NYSE:MTD) but similarly valued. These stocks are AmerisourceBergen Corporation (NYSE:ABC), Franco-Nevada Corporation (NYSE:FNV), Yum China Holdings, Inc. (NYSE:YUMC), and Martin Marietta Materials, Inc. (NYSE:MLM). This group of stocks’ market values are similar to MTD’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ABC 36 435220 0
FNV 22 750908 4
YUMC 29 465970 1
MLM 40 2550137 0
Average 31.75 1050559 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.75 hedge funds with bullish positions and the average amount invested in these stocks was $1051 million. That figure was $327 million in MTD’s case. Martin Marietta Materials, Inc. (NYSE:MLM) is the most popular stock in this table. On the other hand Franco-Nevada Corporation (NYSE:FNV) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Mettler-Toledo International Inc. (NYSE:MTD) is even less popular than FNV. Hedge funds dodged a bullet by taking a bearish stance towards MTD. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MTD wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MTD investors were disappointed as the stock returned 2.1% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

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

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