Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Herman Miller, Inc. (NASDAQ:MLHR) based on that data and determine whether they were really smart about the stock.
Is Herman Miller, Inc. (NASDAQ:MLHR) ready to rally soon? The smart money was becoming less hopeful. The number of long hedge fund positions went down by 2 recently. Our calculations also showed that MLHR 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.
If you'd ask most shareholders, hedge funds are assumed to be unimportant, outdated investment vehicles of years past. While there are more than 8000 funds trading today, Our experts look at the moguls of this group, around 850 funds. These hedge fund managers command most of all hedge funds' total capital, and by watching their matchless investments, Insider Monkey has discovered a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year 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 .
[caption id="attachment_340081" align="aligncenter" width="390"] Phill Gross of Adage Capital Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like "the Starbucks of cannabis" to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Keeping this in mind let's review the fresh hedge fund action regarding Herman Miller, Inc. (NASDAQ:MLHR).
What have hedge funds been doing with Herman Miller, Inc. (NASDAQ:MLHR)?
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the fourth quarter of 2019. On the other hand, there were a total of 23 hedge funds with a bullish position in MLHR a year ago. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Herman Miller, Inc. (NASDAQ:MLHR), with a stake worth $76.1 million reported as of the end of September. Trailing AQR Capital Management was Millennium Management, which amassed a stake valued at $4.5 million. Ancora Advisors, Renaissance Technologies, and Gardner Russo & Gardner were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Herman Miller, Inc. (NASDAQ:MLHR), around 0.7% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.32 percent of its 13F equity portfolio to MLHR.
Judging by the fact that Herman Miller, Inc. (NASDAQ:MLHR) has experienced bearish sentiment from the aggregate hedge fund industry, it's safe to say that there exists a select few funds that slashed their positions entirely in the first quarter. It's worth mentioning that Noam Gottesman's GLG Partners dropped the biggest stake of all the hedgies tracked by Insider Monkey, valued at about $23.9 million in stock. Ken Grossman and Glen Schneider's fund, SG Capital Management, also dumped its stock, about $12.6 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds in the first quarter.
Let's go over hedge fund activity in other stocks similar to Herman Miller, Inc. (NASDAQ:MLHR). We will take a look at Evoqua Water Technologies Corp. (NYSE:AQUA), TowneBank (NASDAQ:TOWN), Four Corners Property Trust, Inc. (NYSE:FCPT), and Sogou Inc. (NYSE:SOGO). All of these stocks' market caps are closest to MLHR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AQUA,28,124642,7 TOWN,4,25151,-2 FCPT,14,53932,-1 SOGO,6,9617,-5 Average,13,53336,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $112 million in MLHR's case. Evoqua Water Technologies Corp. (NYSE:AQUA) is the most popular stock in this table. On the other hand TowneBank (NASDAQ:TOWN) is the least popular one with only 4 bullish hedge fund positions. Herman Miller, Inc. (NASDAQ:MLHR) 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. 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately MLHR wasn't nearly as popular as these 10 stocks and hedge funds that were betting on MLHR were disappointed as the stock returned 6.4% during the same time period 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.