While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Manpowergroup Inc (NYSE:MAN).
Is Manpowergroup Inc (NYSE:MAN) ready to rally soon? The best stock pickers were taking a bearish view. The number of bullish hedge fund positions were trimmed by 5 recently. Manpowergroup Inc (NYSE:MAN) was in 26 hedge funds’ portfolios at the end of March. The all time high for this statistic is 34. Our calculations also showed that MAN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 31 hedge funds in our database with MAN positions at the end of the fourth quarter.
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 115 percentage points since March 2017 (see the details here). 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, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a peek at the latest hedge fund action encompassing Manpowergroup Inc (NYSE:MAN).
Do Hedge Funds Think MAN Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the fourth quarter of 2020. By comparison, 23 hedge funds held shares or bullish call options in MAN a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Cliff Asness’s AQR Capital Management has the number one position in Manpowergroup Inc (NYSE:MAN), worth close to $70.8 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $38.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism contain Renaissance Technologies, Israel Englander’s Millennium Management and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Arjuna Capital allocated the biggest weight to Manpowergroup Inc (NYSE:MAN), around 0.68% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, dishing out 0.34 percent of its 13F equity portfolio to MAN.
Since Manpowergroup Inc (NYSE:MAN) has witnessed a decline in interest from hedge fund managers, logic holds that there were a few hedge funds that slashed their full holdings in the first quarter. Interestingly, William B. Gray’s Orbis Investment Management sold off the biggest position of the 750 funds followed by Insider Monkey, valued at about $38.5 million in stock. Vikas Lunia’s fund, Lunia Capital, also dumped its stock, about $5.4 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 5 funds in the first quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Manpowergroup Inc (NYSE:MAN) but similarly valued. These stocks are Crocs, Inc. (NASDAQ:CROX), Nutanix, Inc. (NASDAQ:NTNX), Enel Chile S.A. (NYSE:ENIC), Quidel Corporation (NASDAQ:QDEL), J2 Global Inc (NASDAQ:JCOM), KBR, Inc. (NYSE:KBR), and Perrigo Co Plc (NYSE:PRGO). 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|
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $504 million. That figure was $263 million in MAN’s case. Perrigo Co Plc (NYSE:PRGO) is the most popular stock in this table. On the other hand Enel Chile S.A. (NYSE:ENIC) is the least popular one with only 7 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 overall hedge fund sentiment score for MAN is 59.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on MAN as the stock returned 18.6% since the end of Q1 (through 7/9) 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.