Is Minerals Technologies Inc (NYSE:MTX) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Minerals Technologies Inc (NYSE:MTX) was in 15 hedge funds' portfolios at the end of the third quarter of 2018. MTX investors should be aware of a decrease in activity from the world's largest hedge funds of late. There were 17 hedge funds in our database with MTX holdings at the end of the previous quarter. Our calculations also showed that mtx isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let's take a glance at the latest hedge fund action encompassing Minerals Technologies Inc (NYSE:MTX).
How have hedgies been trading Minerals Technologies Inc (NYSE:MTX)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MTX over the last 13 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Royce & Associates was the largest shareholder of Minerals Technologies Inc (NYSE:MTX), with a stake worth $109.1 million reported as of the end of September. Trailing Royce & Associates was AQR Capital Management, which amassed a stake valued at $25 million. GAMCO Investors, D E Shaw, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Since Minerals Technologies Inc (NYSE:MTX) has faced a decline in interest from the aggregate hedge fund industry, it's safe to say that there exists a select few money managers who sold off their entire stakes heading into Q3. Intriguingly, Joel Greenblatt's Gotham Asset Management said goodbye to the largest investment of the 700 funds monitored by Insider Monkey, worth about $2 million in stock. Jim Simons's fund, Renaissance Technologies, also dropped its stock, about $0.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q3.
Let's go over hedge fund activity in other stocks similar to Minerals Technologies Inc (NYSE:MTX). These stocks are Rowan Companies plc (NYSE:RDC), WD-40 Company (NASDAQ:WDFC), BBVA Banco Frances S.A. (NYSE:BFR), and G-III Apparel Group, Ltd. (NASDAQ:GIII). All of these stocks' market caps are closest to MTX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RDC,31,761642,5 WDFC,10,154086,1 BFR,7,13619,-1 GIII,17,273783,-4 Average,16.25,300783,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $301 million. That figure was $171 million in MTX's case. Rowan Companies plc (NYSE:RDC) is the most popular stock in this table. On the other hand BBVA Banco Frances S.A. (NYSE:BFR) is the least popular one with only 7 bullish hedge fund positions. Minerals Technologies Inc (NYSE:MTX) 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. In this regard RDC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.