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Hedge Funds Cashing Out Of Mantech International Corp (MANT)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Mantech International Corp (NASDAQ:MANT) based on those filings.

Mantech International Corp (NASDAQ:MANT) shareholders have witnessed a decrease in enthusiasm from smart money recently. 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.

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 S&P 500 ETFs by 58 percentage points since March 2017 (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.

Chuck Royce

Chuck Royce of Royce & Associates

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 take a peek at the fresh hedge fund action surrounding Mantech International Corp (NASDAQ:MANT).

How have hedgies been trading 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. On the other hand, there were a total of 12 hedge funds with a bullish position in MANT a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Paul Marshall and Ian Wace’s Marshall Wace LLP has the largest position in Mantech International Corp (NASDAQ:MANT), worth close to $10.1 million, corresponding to 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, led by Ken Griffin, holding a $7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain John Overdeck and David Siegel’s Two Sigma Advisors, Renaissance Technologies and Murray Stahl’s 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, designating 0.34 percent of its 13F equity portfolio to MANT.

Judging by the fact that Mantech International Corp (NASDAQ:MANT) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds that decided to sell off their entire stakes heading into Q4. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest stake of the 750 funds watched by Insider Monkey, worth close to $1.4 million in stock. Mika Toikka’s fund, AlphaCrest Capital Management, also cut its stock, about $1.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 6 funds heading into Q4.

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. We will take a look at 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 values match MANT’s market value.

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 13.4% in 2020 through June 22nd and surpassed the market by 15.9 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 -5.7% during the second quarter 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.