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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Materion Corp (NYSE:MTRN).
Hedge fund interest in Materion Corp (NYSE:MTRN) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare MTRN to other stocks including The Providence Service Corporation (NASDAQ:PRSC), Transocean Ltd (NYSE:RIG), and Granite Construction Incorporated (NYSE:GVA) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are dozens of gauges investors use to evaluate publicly traded companies. Some of the most under-the-radar gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outperform the broader indices by a significant margin (see the details here).
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Mario Gabelli of GAMCO Investors[/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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a look at the recent hedge fund action encompassing Materion Corp (NYSE:MTRN).
How have hedgies been trading Materion Corp (NYSE:MTRN)?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. By comparison, 17 hedge funds held shares or bullish call options in MTRN a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Materion Corp (NYSE:MTRN), with a stake worth $18.8 million reported as of the end of September. Trailing Renaissance Technologies was GAMCO Investors, which amassed a stake valued at $12.2 million. Fisher Asset Management, Millennium Management, and GLG Partners 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 ACK Asset Management allocated the biggest weight to Materion Corp (NYSE:MTRN), around 0.62% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.18 percent of its 13F equity portfolio to MTRN.
Due to the fact that Materion Corp (NYSE:MTRN) has faced bearish sentiment from hedge fund managers, it's easy to see that there were a few funds who were dropping their entire stakes heading into Q4. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital cut the largest position of the 750 funds tracked by Insider Monkey, worth an estimated $1.6 million in stock. Ryan Tolkin (CIO)'s fund, Schonfeld Strategic Advisors, also dropped its stock, about $0.5 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Materion Corp (NYSE:MTRN) but similarly valued. We will take a look at The Providence Service Corporation (NASDAQ:PRSC), Transocean Ltd (NYSE:RIG), Granite Construction Incorporated (NYSE:GVA), and Arcos Dorados Holding Inc (NYSE:ARCO). This group of stocks' market caps match MTRN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PRSC,11,142849,-4 RIG,21,117370,-5 GVA,16,45982,9 ARCO,12,36064,-1 Average,15,85566,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $61 million in MTRN's case. Transocean Ltd (NYSE:RIG) is the most popular stock in this table. On the other hand The Providence Service Corporation (NASDAQ:PRSC) is the least popular one with only 11 bullish hedge fund positions. Materion Corp (NYSE:MTRN) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on MTRN as the stock returned 67.5% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.