The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded The Middleby Corporation (NASDAQ:MIDD) based on those filings.
Is MIDD a good stock to buy? The smart money was getting more optimistic. The number of bullish hedge fund positions went up by 4 lately. The Middleby Corporation (NASDAQ:MIDD) was in 30 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 35. Our calculations also showed that MIDD isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. With all of this in mind we’re going to review the recent hedge fund action encompassing The Middleby Corporation (NASDAQ:MIDD).
Do Hedge Funds Think MIDD Is A Good Stock To Buy Now?
At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in MIDD a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Middleby Corporation (NASDAQ:MIDD) was held by Arrowstreet Capital, which reported holding $65.9 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $51.2 million position. Other investors bullish on the company included Bares Capital Management, Balyasny Asset Management, and Millennium Management. In terms of the portfolio weights assigned to each position Bares Capital Management allocated the biggest weight to The Middleby Corporation (NASDAQ:MIDD), around 0.83% of its 13F portfolio. Balyasny Asset Management is also relatively very bullish on the stock, setting aside 0.28 percent of its 13F equity portfolio to MIDD.
As aggregate interest increased, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the biggest position in The Middleby Corporation (NASDAQ:MIDD). Balyasny Asset Management had $38.5 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also initiated a $10.1 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management, Michael Gelband’s ExodusPoint Capital, and Schonfeld Strategic Advisors.
Let’s also examine hedge fund activity in other stocks similar to The Middleby Corporation (NASDAQ:MIDD). We will take a look at Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), Redfin Corporation (NASDAQ:RDFN), Ralph Lauren Corporation (NYSE:RL), Jones Lang LaSalle Inc (NYSE:JLL), Life Storage, Inc. (NYSE:LSI), Lancaster Colony Corporation (NASDAQ:LANC), and US Foods Holding Corp. (NYSE:USFD). This group of stocks’ market valuations are similar to MIDD’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $410 million. That figure was $282 million in MIDD’s case. US Foods Holding Corp. (NYSE:USFD) is the most popular stock in this table. On the other hand Life Storage, Inc. (NYSE:LSI) is the least popular one with only 18 bullish hedge fund positions. The Middleby Corporation (NASDAQ:MIDD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MIDD is 60.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on MIDD as the stock returned 47% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.