The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought The Manitowoc Company, Inc. (NYSE:MTW) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
The Manitowoc Company, Inc. (NYSE:MTW) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistics is 28. MTW investors should be aware of a decrease in hedge fund sentiment in recent months. There were 21 hedge funds in our database with MTW positions at the end of the first quarter. Our calculations also showed that MTW isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 56 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let’s go over the new hedge fund action encompassing The Manitowoc Company, Inc. (NYSE:MTW).
What does smart money think about The Manitowoc Company, Inc. (NYSE:MTW)?
At second quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the first quarter of 2020. By comparison, 13 hedge funds held shares or bullish call options in MTW a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Among these funds, Firefly Value Partners held the most valuable stake in The Manitowoc Company, Inc. (NYSE:MTW), which was worth $18.1 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $5.3 million worth of shares. Rutabaga Capital Management, Lodge Hill Capital, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Firefly Value Partners allocated the biggest weight to The Manitowoc Company, Inc. (NYSE:MTW), around 3.87% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, earmarking 2.65 percent of its 13F equity portfolio to MTW.
Judging by the fact that The Manitowoc Company, Inc. (NYSE:MTW) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of fund managers that decided to sell off their positions entirely by the end of the second quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP dropped the largest investment of the 750 funds tracked by Insider Monkey, valued at close to $0.8 million in stock. Mike Vranos’s fund, Ellington, also cut its stock, about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds by the end of the second quarter.
Let’s check out hedge fund activity in other stocks similar to The Manitowoc Company, Inc. (NYSE:MTW). We will take a look at MannKind Corporation (NASDAQ:MNKD), Daily Journal Corporation (NASDAQ:DJCO), Calithera Biosciences Inc (NASDAQ:CALA), Avid Bioservices, Inc. (NASDAQ:CDMO), Viomi Technology Co., Ltd (NASDAQ:VIOT), TCR2 Therapeutics Inc. (NASDAQ:TCRR), and Heritage Insurance Holdings Inc (NYSE:HRTG). This group of stocks’ market valuations match MTW’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 10 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $49 million in MTW’s case. Avid Bioservices, Inc. (NASDAQ:CDMO) is the most popular stock in this table. On the other hand Daily Journal Corporation (NASDAQ:DJCO) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks The Manitowoc Company, Inc. (NYSE:MTW) is more popular among hedge funds. Our overall hedge fund sentiment score for MTW is 73.4. 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 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. Unfortunately MTW wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MTW were disappointed as the stock returned -22.7% during the third 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.
Disclosure: None. This article was originally published at Insider Monkey.