The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Modine Manufacturing Company (NYSE:MOD).
Is MOD a good stock to buy now? The best stock pickers were getting less bullish. The number of bullish hedge fund bets were cut by 1 recently. Modine Manufacturing Company (NYSE:MOD) was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 20. Our calculations also showed that MOD 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 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 recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Now let’s take a glance at the new hedge fund action encompassing Modine Manufacturing Company (NYSE:MOD).
Do Hedge Funds Think MOD Is A Good Stock To Buy Now?
At third quarter’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MOD over the last 21 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Modine Manufacturing Company (NYSE:MOD) was held by GAMCO Investors, which reported holding $14 million worth of stock at the end of September. It was followed by Royce & Associates with a $8.7 million position. Other investors bullish on the company included DC Capital Partners, Millennium Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position DC Capital Partners allocated the biggest weight to Modine Manufacturing Company (NYSE:MOD), around 35.42% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.15 percent of its 13F equity portfolio to MOD.
Due to the fact that Modine Manufacturing Company (NYSE:MOD) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of hedge funds that slashed their entire stakes by the end of the third quarter. It’s worth mentioning that Donald Sussman’s Paloma Partners said goodbye to the largest stake of the 750 funds tracked by Insider Monkey, comprising an estimated $0.3 million in stock. Roger Ibbotson’s fund, Zebra Capital Management, also sold off its stock, about $0.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 1 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to Modine Manufacturing Company (NYSE:MOD). We will take a look at Gamco Investors Inc. (NYSE:GBL), Seneca Foods Corp. (NASDAQ:SENEB), EVI Industries Inc (NYSE:EVI), CorePoint Lodging Inc. (NYSE:CPLG), Repro Med Systems, Inc. (NASDAQ:KRMD), HEXO Corp. (NYSE:HEXO), and Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE). This group of stocks’ market valuations resemble MOD’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 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $48 million in MOD’s case. Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) is the most popular stock in this table. On the other hand EVI Industries Inc (NYSE:EVI) is the least popular one with only 1 bullish hedge fund positions. Modine Manufacturing Company (NYSE:MOD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MOD is 56. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on MOD as the stock returned 86.6% since the end of Q3 (through 12/8) 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.