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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Mueller Industries, Inc. (NYSE:MLI).
Is Mueller Industries, Inc. (NYSE:MLI) a buy here? Money managers are reducing their bets on the stock. The number of long hedge fund bets went down by 4 recently. Our calculations also showed that MLI 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.
To most investors, hedge funds are perceived as worthless, old financial tools of years past. While there are greater than 8000 funds in operation today, Our experts look at the aristocrats of this club, approximately 850 funds. Most estimates calculate that this group of people direct the lion's share of all hedge funds' total capital, and by observing their unrivaled picks, Insider Monkey has revealed a few investment strategies that have historically outperformed the S&P 500 index. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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Jeffrey Gates of Gates Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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. With all of this in mind we're going to take a look at the key hedge fund action regarding Mueller Industries, Inc. (NYSE:MLI).
What have hedge funds been doing with Mueller Industries, Inc. (NYSE:MLI)?
Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MLI over the last 18 quarters. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in Mueller Industries, Inc. (NYSE:MLI) was held by GAMCO Investors, which reported holding $95.8 million worth of stock at the end of September. It was followed by Gates Capital Management with a $25.9 million position. Other investors bullish on the company included Arrowstreet Capital, Royce & Associates, and AltraVue Capital. In terms of the portfolio weights assigned to each position AltraVue Capital allocated the biggest weight to Mueller Industries, Inc. (NYSE:MLI), around 4.65% of its 13F portfolio. Gates Capital Management is also relatively very bullish on the stock, dishing out 1.71 percent of its 13F equity portfolio to MLI.
Due to the fact that Mueller Industries, Inc. (NYSE:MLI) has witnessed falling interest from the smart money, it's easy to see that there exists a select few funds that decided to sell off their positions entirely last quarter. Interestingly, Michael Gelband's ExodusPoint Capital cut the largest position of all the hedgies tracked by Insider Monkey, valued at an estimated $0.9 million in stock. Ryan Tolkin (CIO)'s fund, Schonfeld Strategic Advisors, also dumped its stock, about $0.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Mueller Industries, Inc. (NYSE:MLI) but similarly valued. We will take a look at Corcept Therapeutics Incorporated (NASDAQ:CORT), Hilton Grand Vacations Inc. (NYSE:HGV), Glaukos Corporation (NYSE:GKOS), and InVitae Corporation (NYSE:NVTA). All of these stocks' market caps are similar to MLI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CORT,21,160165,0 HGV,29,512572,-17 GKOS,15,83596,-1 NVTA,10,225622,-3 Average,18.75,245489,-5.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $161 million in MLI's case. Hilton Grand Vacations Inc. (NYSE:HGV) is the most popular stock in this table. On the other hand InVitae Corporation (NYSE:NVTA) is the least popular one with only 10 bullish hedge fund positions. Mueller Industries, Inc. (NYSE:MLI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately MLI wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MLI investors were disappointed as the stock returned 6.1% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.