Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Mettler-Toledo International Inc. (NYSE:MTD).
Is Mettler-Toledo International Inc. (NYSE:MTD) a buy, sell, or hold? Hedge funds were reducing their bets on the stock. The number of bullish hedge fund bets fell by 2 in recent months. Mettler-Toledo International Inc. (NYSE:MTD) was in 27 hedge funds’ portfolios at the end of March. The all time high for this statistic is 31. Our calculations also showed that MTD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 29 hedge funds in our database with MTD positions at the end of the fourth quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. Now let’s take a gander at the key hedge fund action regarding Mettler-Toledo International Inc. (NYSE:MTD).
Do Hedge Funds Think MTD Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from one quarter earlier. On the other hand, there were a total of 31 hedge funds with a bullish position in MTD a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Mettler-Toledo International Inc. (NYSE:MTD) was held by Impax Asset Management, which reported holding $244.8 million worth of stock at the end of December. It was followed by AQR Capital Management with a $177.6 million position. Other investors bullish on the company included Chilton Investment Company, Echo Street Capital Management, and Renaissance Technologies. 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 3.78% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, setting aside 1.25 percent of its 13F equity portfolio to MTD.
Due to the fact that Mettler-Toledo International Inc. (NYSE:MTD) has faced declining sentiment from the smart money, we can see that there exists a select few hedge funds that elected to cut their entire stakes by the end of the first quarter. At the top of the heap, Paul Tudor Jones’s Tudor Investment Corp sold off the largest investment of all the hedgies watched by Insider Monkey, comprising an estimated $5.8 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund dropped about $2.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Mettler-Toledo International Inc. (NYSE:MTD) but similarly valued. We will take a look at Ferguson plc (NYSE:FERG), Dollar Tree, Inc. (NASDAQ:DLTR), Equity Residential (NYSE:EQR), Keysight Technologies Inc (NYSE:KEYS), Fifth Third Bancorp (NASDAQ:FITB), Weyerhaeuser Co. (NYSE:WY), and SVB Financial Group (NASDAQ:SIVB). This group of stocks’ market valuations are closest to MTD’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $925 million. That figure was $1040 million in MTD’s case. SVB Financial Group (NASDAQ:SIVB) is the most popular stock in this table. On the other hand Ferguson plc (NYSE:FERG) is the least popular one with only 5 bullish hedge fund positions. Mettler-Toledo International Inc. (NYSE:MTD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MTD is 54.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on MTD as the stock returned 24.2% since the end of the first quarter (through 7/9) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.