The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and famous investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Herman Miller, Inc. (NASDAQ:MLHR) based on those filings.
Herman Miller, Inc. (NASDAQ:MLHR) shareholders have witnessed an increase in support from the world’s most elite money managers recently. MLHR was in 23 hedge funds’ portfolios at the end of the first quarter of 2019. There were 22 hedge funds in our database with MLHR positions at the end of the previous quarter. Our calculations also showed that mlhr isn’t among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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 our short portfolio.
Let’s analyze the new hedge fund action regarding Herman Miller, Inc. (NASDAQ:MLHR).
How are hedge funds trading Herman Miller, Inc. (NASDAQ:MLHR)?
Heading into the second quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MLHR over the last 15 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in Herman Miller, Inc. (NASDAQ:MLHR), which was worth $34.6 million at the end of the first quarter. On the second spot was Royce & Associates which amassed $16.7 million worth of shares. Moreover, Renaissance Technologies, Gardner Russo & Gardner, and Ancora Advisors were also bullish on Herman Miller, Inc. (NASDAQ:MLHR), allocating a large percentage of their portfolios to this stock.
Consequently, some big names were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized position in Herman Miller, Inc. (NASDAQ:MLHR). Balyasny Asset Management had $0.7 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $0.4 million position during the quarter. The following funds were also among the new MLHR investors: Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Brandon Haley’s Holocene Advisors, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Herman Miller, Inc. (NASDAQ:MLHR) but similarly valued. These stocks are Minerals Technologies Inc (NYSE:MTX), Innospec Inc. (NASDAQ:IOSP), The Medicines Company (NASDAQ:MDCO), and ExlService Holdings, Inc. (NASDAQ:EXLS). This group of stocks’ market values are closest to MLHR’s market value.
|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 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $210 million. That figure was $92 million in MLHR’s case. The Medicines Company (NASDAQ:MDCO) is the most popular stock in this table. On the other hand ExlService Holdings, Inc. (NASDAQ:EXLS) is the least popular one with only 10 bullish hedge fund positions. Herman Miller, Inc. (NASDAQ:MLHR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on MLHR as the stock returned 2.3% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.