At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Myers Industries, Inc. (NYSE:MYE) has seen a decrease in activity from the world's largest hedge funds in recent months. Our calculations also showed that MYE isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's analyze the latest hedge fund action surrounding Myers Industries, Inc. (NYSE:MYE).
Hedge fund activity in Myers Industries, Inc. (NYSE:MYE)
Heading into the fourth quarter of 2018, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -38% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in MYE heading into this year. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, GAMCO Investors held the most valuable stake in Myers Industries, Inc. (NYSE:MYE), which was worth $100.2 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $16.3 million worth of shares. Moreover, Citadel Investment Group, Two Sigma Advisors, and D E Shaw were also bullish on Myers Industries, Inc. (NYSE:MYE), allocating a large percentage of their portfolios to this stock.
Seeing as Myers Industries, Inc. (NYSE:MYE) has experienced falling interest from the smart money, it's easy to see that there exists a select few hedge funds that slashed their full holdings in the third quarter. At the top of the heap, Israel Englander's Millennium Management sold off the biggest position of all the hedgies watched by Insider Monkey, valued at close to $4.5 million in stock, and Douglas Dethy's DC Capital Partners was right behind this move, as the fund dropped about $3.8 million worth. These moves are important to note, as total hedge fund interest dropped by 5 funds in the third quarter.
Let's check out hedge fund activity in other stocks similar to Myers Industries, Inc. (NYSE:MYE). These stocks are Briggs & Stratton Corporation (NYSE:BGG), Virtus Investment Partners Inc (NASDAQ:VRTS), Monarch Casino & Resort, Inc. (NASDAQ:MCRI), and Express, Inc. (NYSE:EXPR). All of these stocks' market caps resemble MYE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BGG,15,24066,4 VRTS,13,87596,1 MCRI,10,140921,-1 EXPR,24,129129,6 Average,15.5,95428,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $124 million in MYE's case. Express, Inc. (NYSE:EXPR) is the most popular stock in this table. On the other hand Monarch Casino & Resort, Inc. (NASDAQ:MCRI) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Myers Industries, Inc. (NYSE:MYE) is even less popular than MCRI. Considering that hedge funds aren't fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn't behind this stock. This isn't necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None. This article was originally published at Insider Monkey.