Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about Mueller Industries, Inc. (NYSE:MLI) in this article.
Is Mueller Industries, Inc. (NYSE:MLI) a buy, sell, or hold? The smart money is taking a neutral view. The number of long hedge fund bets stayed the same which is a slightly negative development in our experience. Mueller Industries, Inc. (NYSE:MLI) was in 16 hedge funds’ portfolios at the end of the third quarter of 2015. At the end of this article, we will also compare MLI to other stocks, including DuPont Fabros Technology, Inc. (NYSE:DFT), Planet Fitness Inc (NYSE:PLNT), and Healthequity Inc (NASDAQ:HQY) to get a better sense of its popularity.
In today’s marketplace, there are a lot of metrics that market participants can use to grade stocks. A couple of the most underrated metrics are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace the market by a significant amount (see the details here).
With all of this in mind, let’s analyze the key action encompassing Mueller Industries, Inc. (NYSE:MLI).
What does the smart money think about Mueller Industries, Inc. (NYSE:MLI)?
Heading into Q4, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, flat over the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Mario Gabelli’s GAMCO Investors has the most valuable position in Mueller Industries, Inc. (NYSE:MLI), worth close to $112.2 million, corresponding to 0.7% of its total 13F portfolio. The second most bullish fund manager is Gates Capital Management, led by Jeffrey Gates, holding an $96.4 million position; 3.7% of its 13F portfolio is allocated to the stock. The remaining hedge funds and institutional investors with similar optimism include Ken Fisher’s Fisher Asset Management, Chuck Royce’s Royce & Associates and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Seeing as Mueller Industries, Inc. (NYSE:MLI) has witnessed a slighlty declining interest from the smart money, it’s safe to say that there was a specific group of fund managers that elected to cut their full holdings by the end of the third quarter. It’s worth mentioning that Clint Murray’s Lodge Hill Capital dropped the biggest position of the 700 funds watched by Insider Monkey, valued at an estimated $12.7 million in stock, and Paul Reeder and Edward Shapiro of PAR Capital Management was right behind this move, as the fund said goodbye to about $11.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Mueller Industries, Inc. (NYSE:MLI). These stocks are DuPont Fabros Technology, Inc. (NYSE:DFT), Planet Fitness Inc (NYSE:PLNT), Healthequity Inc (NASDAQ:HQY), and Mack Cali Realty Corp (NYSE:CLI). This group of stocks’ market values resembles Mueller Industries, Inc. (NYSE:MLI)’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see, these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $111 million. By comparison, the hedge fund interest towards Mueller Industries is average, but the funds we track amassed some $300 million worth of its stock at the end of September. This could suggest that the stock may be a good bet, but a more detailed analysis is required. However, we think that it is better to invest in stocks that hedge funds are collectively the most bullish on, and CLI, might be also an alternative to consider for a long position.