Mueller Industries, Inc. (MLI): Are Hedge Funds Right About This Stock?

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Mueller Industries, Inc. (NYSE:MLI) , and what that likely means for the prospects of the company and its stock.

Mueller Industries, Inc. (NYSE:MLI) shareholders have witnessed a decrease in hedge fund sentiment of late. MLI was in 15 hedge funds’ portfolios at the end of the third quarter of 2016. There were 16 hedge funds in our database with MLI positions at the end of the previous quarter. At the end of this article we will also compare MLI to other stocks including Lithia Motors Inc (NYSE:LAD), Och-Ziff Capital Management Group LLC (NYSE:OZM), and DiamondRock Hospitality Company (NYSE:DRH) to get a better sense of its popularity.

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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Keeping this in mind, let’s view the latest action surrounding Mueller Industries, Inc. (NYSE:MLI).

What have hedge funds been doing with Mueller Industries, Inc. (NYSE:MLI)?

At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 6% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in MLI heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Mario Gabelli’s GAMCO Investors has the number one position in Mueller Industries, Inc. (NYSE:MLI), worth close to $133.3 million, corresponding to 0.9% of its total 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, led by Ken Fisher, which holds a $41.6 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions contain Chuck Royce’s Royce & Associates, Jeffrey Gates’s Gates Capital Management and D. E. Shaw’s D E Shaw. We should note that Gates Capital Management is 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.