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 Monro Inc (NASDAQ:MNRO).
Monro Inc (NASDAQ:MNRO) was in 17 hedge funds' portfolios at the end of March. MNRO has experienced a decrease in enthusiasm from smart money recently. There were 18 hedge funds in our database with MNRO positions at the end of the previous quarter. Our calculations also showed that MNRO isn't among the 30 most popular stocks among hedge funds.
If you'd ask most stock holders, hedge funds are assumed to be worthless, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation at present, Our experts look at the moguls of this club, about 750 funds. Most estimates calculate that this group of people control the majority of the smart money's total asset base, and by keeping an eye on their top equity investments, Insider Monkey has found many investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
[caption id="attachment_746830" align="aligncenter" width="473"] Matthew Hulsizer of PEAK6 Capital[/caption]
Let's take a look at the recent hedge fund action regarding Monro Inc (NASDAQ:MNRO).
What have hedge funds been doing with Monro Inc (NASDAQ:MNRO)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MNRO over the last 15 quarters. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Arlington Value Capital held the most valuable stake in Monro Inc (NASDAQ:MNRO), which was worth $143.4 million at the end of the first quarter. On the second spot was Royce & Associates which amassed $37.5 million worth of shares. Moreover, Balyasny Asset Management, Maverick Capital, and PEAK6 Capital Management were also bullish on Monro Inc (NASDAQ:MNRO), allocating a large percentage of their portfolios to this stock.
Since Monro Inc (NASDAQ:MNRO) has witnessed falling interest from the aggregate hedge fund industry, it's safe to say that there were a few money managers who were dropping their positions entirely in the third quarter. At the top of the heap, Mark N. Diker's Diker Management sold off the biggest investment of all the hedgies watched by Insider Monkey, totaling close to $5.6 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also said goodbye to its stock, about $4 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 funds in the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Monro Inc (NASDAQ:MNRO) but similarly valued. We will take a look at Mimecast Limited (NASDAQ:MIME), Chart Industries, Inc. (NASDAQ:GTLS), Genesis Energy, L.P. (NYSE:GEL), and Valmont Industries, Inc. (NYSE:VMI). All of these stocks' market caps resemble MNRO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MIME,35,770740,12 GTLS,20,267307,5 GEL,3,22495,-2 VMI,19,234638,1 Average,19.25,323795,4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $324 million. That figure was $270 million in MNRO's case. Mimecast Limited (NASDAQ:MIME) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 3 bullish hedge fund positions. Monro Inc (NASDAQ:MNRO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately MNRO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MNRO investors were disappointed as the stock returned 1.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
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