Should You Avoid Materion Corp (MTRN)?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Materion Corp (NYSE:MTRN).

Is Materion Corp (NYSE:MTRN) a great stock to buy now? Prominent investors are certainly becoming less confident. The number of long hedge fund bets that are revealed through the 13F filings dropped by 4 lately. MTRN was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. There were 14 hedge funds in our database with MTRN positions at the end of the previous quarter. At the end of this article we will also compare MTRN to other stocks including Tredegar Corporation (NYSE:TG), Ciner Resources LP (NYSE:CINR), and Seacoast Banking Corporation of Florida (NASDAQ:SBCF) 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.

Keeping this in mind, let’s take a peek at the fresh action surrounding Materion Corp (NYSE:MTRN).

Hedge fund activity in Materion Corp (NYSE:MTRN)

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 29% from the second quarter of 2016. On the other hand, there were a total of 11 hedge funds with a bullish position in MTRN at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Mario Gabelli’s GAMCO Investors has the most valuable position in Materion Corp (NYSE:MTRN), worth close to $24.9 million, corresponding to 0.2% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, which manages a $6.1 million position; less than 0.1% of its 13F portfolio is allocated to the company. Other peers with similar optimism consist of Cliff Asness’s AQR Capital Management, D E Shaw, one of the biggest hedge funds in the world, and Israel Englander’s Millennium Management. We should note that none of these hedge funds are 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.

Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that sold off their entire stakes in the stock during the third quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the biggest stake of all the investors followed by Insider Monkey, worth about $1.4 million in stock. Jim Simons’s fund, Renaissance Technologies, also said goodbye to its stock, about $0.6 million worth of MTRN shares.

Let’s also examine hedge fund activity in other stocks similar to Materion Corp (NYSE:MTRN). These stocks are Tredegar Corporation (NYSE:TG), Ciner Resources LP (NYSE:CINR), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), and Ardelyx Inc (NASDAQ:ARDX). All of these stocks’ market caps resemble MTRN’s market cap.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $40 million in MTRN’s case. Seacoast Banking Corporation of Florida (NASDAQ:SBCF) is the most popular stock in this table. On the other hand Ciner Resources LP (NYSE:CINR) is the least popular one with only 4 bullish hedge fund positions. Materion Corp (NYSE:MTRN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SBCF might be a better candidate to consider taking a long position in.

Disclosure: None