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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Mueller Industries, Inc. (NYSE:MLI) based on those filings.
Is Mueller Industries, Inc. (NYSE:MLI) a safe investment now? Investors who are in the know are getting more bullish. The number of bullish hedge fund positions inched up by 3 recently. Our calculations also showed that MLI 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.
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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Jeffrey Gates of Gates Capital Management[/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 go over the key hedge fund action encompassing Mueller Industries, Inc. (NYSE:MLI).
How have hedgies been trading Mueller Industries, Inc. (NYSE:MLI)?
Heading into the fourth quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MLI over the last 17 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GAMCO Investors was the largest shareholder of Mueller Industries, Inc. (NYSE:MLI), with a stake worth $114.3 million reported as of the end of September. Trailing GAMCO Investors was Gates Capital Management, which amassed a stake valued at $36.1 million. Royce & Associates, Fisher Asset Management, and Arrowstreet Capital 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 Gates Capital Management allocated the biggest weight to Mueller Industries, Inc. (NYSE:MLI), around 1.57% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.95 percent of its 13F equity portfolio to MLI.
As aggregate interest increased, key hedge funds have jumped into Mueller Industries, Inc. (NYSE:MLI) headfirst. GLG Partners, managed by Noam Gottesman, created the largest position in Mueller Industries, Inc. (NYSE:MLI). GLG Partners had $1 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron's Algert Coldiron Investors also made a $0.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny's Balyasny Asset Management, Paul Tudor Jones's Tudor Investment Corp, and Michael Gelband's ExodusPoint Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Mueller Industries, Inc. (NYSE:MLI) but similarly valued. These stocks are Comfort Systems USA, Inc. (NYSE:FIX), InterDigital, Inc. (NASDAQ:IDCC), The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), and Moelis & Company (NYSE:MC). This group of stocks' market values are closest to MLI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FIX,21,124284,-2 IDCC,23,224163,7 NTB,15,114742,2 MC,16,63550,3 Average,18.75,131685,2.5 [/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 $132 million. That figure was $186 million in MLI's case. InterDigital, Inc. (NASDAQ:IDCC) is the most popular stock in this table. On the other hand The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) is the least popular one with only 15 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. 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. A small number of hedge funds were also right about betting on MLI, though not to the same extent, as the stock returned 9.4% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.