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The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards The Middleby Corporation (NASDAQ:MIDD).
The Middleby Corporation (NASDAQ:MIDD) has seen an increase in activity from the world's largest hedge funds in recent months. The Middleby Corporation (NASDAQ:MIDD) was in 35 hedge funds' portfolios at the end of June. The all time high for this statistic is 35. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MIDD isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 S&P 500 ETFs by 79 percentage points since March 2017 (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.
David E. Shaw of D.E. Shaw
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let's take a look at the new hedge fund action surrounding The Middleby Corporation (NASDAQ:MIDD).
Do Hedge Funds Think MIDD Is A Good Stock To Buy Now?
At the end of June, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MIDD over the last 24 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Select Equity Group held the most valuable stake in The Middleby Corporation (NASDAQ:MIDD), which was worth $214.5 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $145.9 million worth of shares. Arrowstreet Capital, D E Shaw, and Renaissance Technologies 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 Mountaineer Partners Management allocated the biggest weight to The Middleby Corporation (NASDAQ:MIDD), around 7.19% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, dishing out 2.4 percent of its 13F equity portfolio to MIDD.
As industrywide interest jumped, some big names have jumped into The Middleby Corporation (NASDAQ:MIDD) headfirst. Select Equity Group, managed by Robert Joseph Caruso, established the most outsized position in The Middleby Corporation (NASDAQ:MIDD). Select Equity Group had $214.5 million invested in the company at the end of the quarter. Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital also made a $44.5 million investment in the stock during the quarter. The other funds with brand new MIDD positions are Ira Unschuld's Brant Point Investment Management, Carl Tiedemann and Michael Tiedemann's TIG Advisors, and David MacKnight's One Fin Capital Management.
Let's check out hedge fund activity in other stocks similar to The Middleby Corporation (NASDAQ:MIDD). We will take a look at First Solar, Inc. (NASDAQ:FSLR), Vertiv Holdings Co (NYSE:VRT), Reliance Steel & Aluminum Co. (NYSE:RS), NiSource Inc. (NYSE:NI), Western Alliance Bancorporation (NYSE:WAL), Upstart Holdings, Inc. (NASDAQ:UPST), and Americold Realty Trust (NYSE:COLD). This group of stocks' market values resemble MIDD's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSLR,31,317049,7 VRT,36,904262,-3 RS,27,273896,9 NI,36,559849,8 WAL,28,188070,5 UPST,21,2135453,8 COLD,16,530325,0 Average,27.9,701272,4.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.9 hedge funds with bullish positions and the average amount invested in these stocks was $701 million. That figure was $822 million in MIDD's case. Vertiv Holdings Co (NYSE:VRT) is the most popular stock in this table. On the other hand Americold Realty Trust (NYSE:COLD) is the least popular one with only 16 bullish hedge fund positions. The Middleby Corporation (NASDAQ:MIDD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MIDD is 87.5. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately MIDD wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MIDD were disappointed as the stock returned -3.6% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.