Is Mueller Water Products, Inc. (MWA) A Good Stock To Buy?

Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.

Is Mueller Water Products, Inc. (NYSE:MWA) the right pick for your portfolio? Money managers are becoming less confident. The number of bullish hedge fund positions retreated by 2 recently. MWA was in 23 hedge funds’ portfolios at the end of September. There were 25 hedge funds in our database with MWA holdings at the end of the previous quarter. 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 Essendant Inc (NASDAQ:ESND), Chemical Financial Corporation (NASDAQ:CHFC), and Power Integrations Inc (NASDAQ:POWI) to gather more data points.

Keeping this in mind, we’re going to take a gander at the key action surrounding Mueller Water Products, Inc. (NYSE:MWA).

What have hedge funds been doing with Mueller Water Products, Inc. (NYSE:MWA)?

At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the second quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Impax Asset Management, managed by Ian Simm, holds the most valuable position in Mueller Water Products, Inc. (NYSE:MWA). Impax Asset Management has a $29.7 million position in the stock, comprising 2.1% of its 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $25.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions include Peter Schliemann’s Rutabaga Capital Management, Claus Moller’s P2 Capital Partners and Israel Englander’s Millennium Management.

Because Mueller Water Products, Inc. (NYSE:MWA) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there is a sect of funds who sold off their positions entirely last quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management said goodbye to the biggest position of the 700 funds followed by Insider Monkey, worth close to $6.1 million in stock. Jerome Debs’s fund, Bodri Capital Management, also said goodbye to its stock, about $2.7 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Mueller Water Products, Inc. (NYSE:MWA) but similarly valued. These stocks are Essendant Inc (NASDAQ:ESND), Chemical Financial Corporation (NASDAQ:CHFC), Power Integrations Inc (NASDAQ:POWI), and Trinseo S.A. (NYSE:TSE). This group of stocks’ market caps are similar to MWA’s market cap.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $119 million in MWA’s case. Essendant Inc (NASDAQ:ESND) is the most popular stock in this table. On the other hand Trinseo S.A. (NYSE:TSE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Mueller Water Products, Inc. (NYSE:MWA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.