The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Manitowoc Foodservice Inc(NYSE:MFS) from the perspective of those successful funds.
Is Manitowoc Foodservice Inc(NYSE:MFS) a buy here? Hedge funds are surely turning bullish. The number of long hedge fund positions that are disclosed in regulatory 13F filings went up by 1 lately. There were 19 hedge funds in our database with MFS positions at the end of June. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Darling International Inc. (NYSE:DAR), J&J Snack Foods Corp. (NASDAQ:JJSF), and Boyd Gaming Corporation (NYSE:BYD) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, we’re going to take a gander at the new action encompassing Manitowoc Foodservice Inc(NYSE:MFS).
What does the smart money think about Manitowoc Foodservice Inc(NYSE:MFS)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in MFS at the beginning of April. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Michael Lowenstein’s Kensico Capital has the biggest position in Manitowoc Foodservice Inc(NYSE:MFS), worth close to $215.7 million, accounting for 4% of its total 13F portfolio. The second largest stake is held by Abrams Capital Management, led by David Abrams, which holds a $182.6 million position; 9.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish comprise Carl Icahn’s Icahn Capital LP, Alan Fournier’s Pennant Capital Management and Michael Doheny’s Freshford Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now, key hedge funds have been driving this bullishness. Renaissance Technologies, led by Jim Simons, established the most valuable position in Manitowoc Foodservice Inc(NYSE:MFS). Renaissance Technologies had $3.5 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $3.1 million investment in the stock during the quarter. The following funds were also among the new MFS investors: Peter Muller’s PDT Partners, Anand Parekh’s Alyeska Investment Group, and Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks similar to Manitowoc Foodservice Inc(NYSE:MFS). We will take a look at Darling International Inc. (NYSE:DAR), J&J Snack Foods Corp. (NASDAQ:JJSF), Boyd Gaming Corporation (NYSE:BYD), and Healthequity Inc (NASDAQ:HQY). This group of stocks’ market valuations are closest to MFS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DAR | 24 | 291374 | -6 |
| JJSF | 10 | 54617 | 1 |
| BYD | 23 | 667524 | -4 |
| HQY | 12 | 56301 | 2 |
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $267 million. That figure was $717 million in MFS’s case. Darling International Inc. (NYSE:DAR) is the most popular stock in this table. On the other hand J&J Snack Foods Corp. (NASDAQ:JJSF) is the least popular one with only 10 bullish hedge fund positions. Manitowoc Foodservice Inc(NYSE:MFS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DAR might be a better candidate to consider taking a long position in.
