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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 second 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 5 years and analyze what the smart money thinks of Matthews International Corp (NASDAQ:MATW) based on that data and determine whether they were really smart about the stock.
Matthews International Corp (NASDAQ:MATW) has experienced an increase in support from the world's most elite money managers lately. Matthews International Corp (NASDAQ:MATW) was in 18 hedge funds' portfolios at the end of June. The all time high for this statistics is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MATW isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 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.
Michael Gelband of ExodusPoint Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. 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. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind let's check out the recent hedge fund action surrounding Matthews International Corp (NASDAQ:MATW).
Hedge fund activity in Matthews International Corp (NASDAQ:MATW)
At the end of the second quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 100% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in MATW a year ago. With hedgies' capital changing hands, there exists a few key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, GAMCO Investors held the most valuable stake in Matthews International Corp (NASDAQ:MATW), which was worth $13.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $10.2 million worth of shares. Ariel Investments, Rutabaga Capital 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 Rutabaga Capital Management allocated the biggest weight to Matthews International Corp (NASDAQ:MATW), around 2.5% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.34 percent of its 13F equity portfolio to MATW.
Now, specific money managers have jumped into Matthews International Corp (NASDAQ:MATW) headfirst. Renaissance Technologies, established the most outsized position in Matthews International Corp (NASDAQ:MATW). Renaissance Technologies had $1.7 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also made a $1.1 million investment in the stock during the quarter. The other funds with brand new MATW positions are Paul Marshall and Ian Wace's Marshall Wace LLP, John Overdeck and David Siegel's Two Sigma Advisors, and Michael Gelband's ExodusPoint Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Matthews International Corp (NASDAQ:MATW) but similarly valued. These stocks are Plantronics, Inc. (NYSE:PLT), CNX Midstream Partners LP (NYSE:CNXM), Quotient Limited (NASDAQ:QTNT), Clovis Oncology Inc (NASDAQ:CLVS), Geopark Ltd (NYSE:GPRK), Varex Imaging Corporation (NASDAQ:VREX), and The Shyft Group, Inc. (NASDAQ:SHYF). This group of stocks' market caps are similar to MATW's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLT,10,17738,4 CNXM,5,8608,3 QTNT,17,228214,-3 CLVS,18,59418,5 GPRK,13,73150,0 VREX,22,69797,3 SHYF,18,66819,1 Average,14.7,74821,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $50 million in MATW's case. Varex Imaging Corporation (NASDAQ:VREX) is the most popular stock in this table. On the other hand CNX Midstream Partners LP (NYSE:CNXM) is the least popular one with only 5 bullish hedge fund positions. Matthews International Corp (NASDAQ:MATW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MATW is 78.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 24.8% in 2020 through the end of third quarter and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on MATW as the stock returned 18.2% during Q3 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.