Is Manhattan Associates, Inc. (MANH) A Good Stock To Buy?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Manhattan Associates, Inc. (NASDAQ:MANH)? The smart money sentiment can provide an answer to this question.

Is MANH a good stock to buy now? Manhattan Associates, Inc. (NASDAQ:MANH) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. Manhattan Associates, Inc. (NASDAQ:MANH) was in 25 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 28. There were 28 hedge funds in our database with MANH holdings at the end of June. Our calculations also showed that MANH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to review the key hedge fund action regarding Manhattan Associates, Inc. (NASDAQ:MANH).

Do Hedge Funds Think MANH Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in MANH a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Among these funds, RGM Capital held the most valuable stake in Manhattan Associates, Inc. (NASDAQ:MANH), which was worth $115.1 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $108.4 million worth of shares. Shannon River Fund Management, Renaissance Technologies, and Two Sigma Advisors 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 RGM Capital allocated the biggest weight to Manhattan Associates, Inc. (NASDAQ:MANH), around 5.64% of its 13F portfolio. Shannon River Fund Management is also relatively very bullish on the stock, dishing out 3.45 percent of its 13F equity portfolio to MANH.

Due to the fact that Manhattan Associates, Inc. (NASDAQ:MANH) has experienced declining sentiment from the smart money, we can see that there lies a certain “tier” of funds who sold off their full holdings in the third quarter. At the top of the heap, Thomas Lee’s Lee Capital Management dumped the largest stake of the 750 funds monitored by Insider Monkey, totaling an estimated $1.9 million in stock, and Richard Driehaus’s Driehaus Capital was right behind this move, as the fund dropped about $1.4 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Manhattan Associates, Inc. (NASDAQ:MANH). We will take a look at McAfee Corp. (NASDAQ:MCFE), CyrusOne Inc (NASDAQ:CONE), Lithia Motors Inc (NYSE:LAD), Amdocs Limited (NASDAQ:DOX), NiSource Inc. (NYSE:NI), TFI International Inc. (NYSE:TFII), and The Middleby Corporation (NASDAQ:MIDD). This group of stocks’ market valuations resemble MANH’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $821 million. That figure was $475 million in MANH’s case. Lithia Motors Inc (NYSE:LAD) is the most popular stock in this table. On the other hand TFI International Inc. (NYSE:TFII) is the least popular one with only 23 bullish hedge fund positions. Manhattan Associates, Inc. (NASDAQ:MANH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MANH is 31.2. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately MANH wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MANH investors were disappointed as the stock returned -2% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.