"Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn't by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today's darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn't attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal," said Vilas Fund in its Q1 investor letter. We aren't sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards The Manitowoc Company, Inc. (NYSE:MTW).
The Manitowoc Company, Inc. (NYSE:MTW) has experienced an increase in hedge fund interest in recent months. MTW was in 15 hedge funds' portfolios at the end of the third quarter of 2019. There were 13 hedge funds in our database with MTW holdings at the end of the previous quarter. Our calculations also showed that MTW isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_258236" align="alignnone" width="600"] Ken Griffin of Citadel Investment Group[/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. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to view the key hedge fund action surrounding The Manitowoc Company, Inc. (NYSE:MTW).
How are hedge funds trading The Manitowoc Company, Inc. (NYSE:MTW)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards MTW over the last 17 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Firefly Value Partners was the largest shareholder of The Manitowoc Company, Inc. (NYSE:MTW), with a stake worth $44 million reported as of the end of September. Trailing Firefly Value Partners was Citadel Investment Group, which amassed a stake valued at $9.2 million. Rutabaga Capital Management, Lodge Hill Capital, and Hawk Ridge Management 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 Firefly Value Partners allocated the biggest weight to The Manitowoc Company, Inc. (NYSE:MTW), around 6.75% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, designating 2.52 percent of its 13F equity portfolio to MTW.
Consequently, some big names have jumped into The Manitowoc Company, Inc. (NYSE:MTW) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the biggest position in The Manitowoc Company, Inc. (NYSE:MTW). Arrowstreet Capital had $1.1 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $0.6 million position during the quarter. The other funds with new positions in the stock are Mike Vranos's Ellington, Paul Marshall and Ian Wace's Marshall Wace, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as The Manitowoc Company, Inc. (NYSE:MTW) but similarly valued. We will take a look at Cellectis SA (NASDAQ:CLLS), Syros Pharmaceuticals, Inc. (NASDAQ:SYRS), Scorpio Bulkers Inc (NYSE:SALT), and Tejon Ranch Company (NYSE:TRC). This group of stocks' market values are closest to MTW's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLLS,8,20654,-3 SYRS,9,89221,-4 SALT,11,26198,1 TRC,12,74498,2 Average,10,52643,-1 [/table]
View table here if you experience formatting issues.
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 $53 million. That figure was $80 million in MTW's case. Tejon Ranch Company (NYSE:TRC) is the most popular stock in this table. On the other hand Cellectis SA (NASDAQ:CLLS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks The Manitowoc Company, Inc. (NYSE:MTW) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on MTW as the stock returned 28% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.