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Hedge Funds Aren’t Done Buying Mettler-Toledo International Inc. (MTD)

In this article we will check out the progression of hedge fund sentiment towards Mettler-Toledo International Inc. (NYSE:MTD) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Mettler-Toledo International Inc. (NYSE:MTD) was in 31 hedge funds’ portfolios at the end of March. MTD has seen 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 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 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.

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the recent hedge fund action encompassing Mettler-Toledo International Inc. (NYSE:MTD).

How are hedge funds trading Mettler-Toledo International Inc. (NYSE:MTD)?

Heading into the second quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MTD over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ian Simm’s Impax Asset Management has the most valuable position in Mettler-Toledo International Inc. (NYSE:MTD), worth close to $95.6 million, amounting to 1.3% of its total 13F portfolio. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $95.5 million position; 0.2% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Renaissance Technologies, Richard Chilton’s Chilton Investment Company and Ken Griffin’s Citadel Investment Group. 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, earmarking 1.67 percent of its 13F equity portfolio to MTD.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Echo Street Capital Management, managed by Greg Poole, assembled the most outsized 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 following funds were also among the new MTD investors: Ryan Caldwell’s Chiron Investment Management, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Lee Ainslie’s Maverick Capital.

Let’s check out 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), The Royal Bank of Scotland Group plc (NYSE:RBS), and Palo Alto Networks Inc (NYSE:PANW). All of these stocks’ market caps resemble 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 The 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 8.3% in 2020 through the end of May but beat the market by 13.2 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 15.1% 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.