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Manpowergroup Inc (MAN): Hedge Funds Taking Some Chips Off The Table

In this article you are going to find out whether hedge funds think Manpowergroup Inc (NYSE:MAN) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Manpowergroup Inc (NYSE:MAN) was in 23 hedge funds’ portfolios at the end of March. MAN investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. There were 27 hedge funds in our database with MAN positions at the end of the previous quarter. Our calculations also showed that MAN isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LP

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s analyze the recent hedge fund action encompassing Manpowergroup Inc (NYSE:MAN).

Hedge fund activity in Manpowergroup Inc (NYSE:MAN)

At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the fourth quarter of 2019. On the other hand, there were a total of 19 hedge funds with a bullish position in MAN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Manpowergroup Inc (NYSE:MAN) was held by AQR Capital Management, which reported holding $197.2 million worth of stock at the end of September. It was followed by Royce & Associates with a $12.2 million position. Other investors bullish on the company included Millennium Management, D E Shaw, and Gotham Asset Management. In terms of the portfolio weights assigned to each position Neo Ivy Capital allocated the biggest weight to Manpowergroup Inc (NYSE:MAN), around 0.51% of its 13F portfolio. AQR Capital Management is also relatively very bullish on the stock, setting aside 0.33 percent of its 13F equity portfolio to MAN.

Judging by the fact that Manpowergroup Inc (NYSE:MAN) has faced bearish sentiment from hedge fund managers, logic holds that there were a few hedgies that slashed their positions entirely heading into Q4. Intriguingly, James Parsons’s Junto Capital Management said goodbye to the biggest position of all the hedgies monitored by Insider Monkey, comprising an estimated $41 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $19.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 4 funds heading into Q4.

Let’s now review hedge fund activity in other stocks similar to Manpowergroup Inc (NYSE:MAN). These stocks are Popular Inc (NASDAQ:BPOP), Global Blood Therapeutics Inc (NASDAQ:GBT), Hexcel Corporation (NYSE:HXL), and Strategic Education Inc (NASDAQ:STRA). All of these stocks’ market caps are closest to MAN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BPOP 28 468895 -5
GBT 23 431206 0
HXL 27 187145 -3
STRA 13 228871 0
Average 22.75 329029 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $329 million. That figure was $244 million in MAN’s case. Popular Inc (NASDAQ:BPOP) is the most popular stock in this table. On the other hand Strategic Education Inc (NASDAQ:STRA) is the least popular one with only 13 bullish hedge fund positions. Manpowergroup Inc (NYSE:MAN) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on MAN as the stock returned 40.1% in Q2 (through June 10th) 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.