Is Monro, Inc. (NASDAQ:MNRO) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Monro, Inc. (NASDAQ:MNRO) has experienced an increase in activity from the world's largest hedge funds recently. MNRO was in 18 hedge funds' portfolios at the end of December. There were 10 hedge funds in our database with MNRO holdings at the end of the previous quarter. Our calculations also showed that MNRO isn't among the 30 most popular stocks among hedge funds.
Today there are several methods stock traders put to use to value their holdings. Two of the best methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outperform their index-focused peers by a healthy margin (see the details here).
Let's analyze the key hedge fund action regarding Monro, Inc. (NASDAQ:MNRO).
Hedge fund activity in Monro, Inc. (NASDAQ:MNRO)
At Q4's end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 80% from the second quarter of 2018. By comparison, 10 hedge funds held shares or bullish call options in MNRO a year ago. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Arlington Value Capital was the largest shareholder of Monro, Inc. (NASDAQ:MNRO), with a stake worth $113.1 million reported as of the end of September. Trailing Arlington Value Capital was Royce & Associates, which amassed a stake valued at $30 million. Driehaus Capital, Diker Management, and GAMCO Investors were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, some big names have been driving this bullishness. Driehaus Capital, managed by Richard Driehaus, initiated the largest position in Monro, Inc. (NASDAQ:MNRO). Driehaus Capital had $6.1 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $2.4 million investment in the stock during the quarter. The following funds were also among the new MNRO investors: Minhua Zhang's Weld Capital Management, Cliff Asness's AQR Capital Management, and Brandon Haley's Holocene Advisors.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Monro, Inc. (NASDAQ:MNRO) but similarly valued. These stocks are Genesis Energy, L.P. (NYSE:GEL), Spectrum Brands Holdings, Inc. (NYSE:SPB), SiteOne Landscape Supply, Inc. (NYSE:SITE), and Alliance Resource Partners, L.P. (NASDAQ:ARLP). All of these stocks' market caps are similar to MNRO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GEL,5,7438,3 SPB,25,576863,-1 SITE,11,38041,-4 ARLP,8,96584,-1 Average,12.25,179732,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $180 million in MNRO's case. Spectrum Brands Holdings, Inc. (NYSE:SPB) 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 5 bullish hedge fund positions. Monro, Inc. (NASDAQ:MNRO) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately MNRO wasn't nearly as popular as these 15 stock and hedge funds that were betting on MNRO were disappointed as the stock returned 15% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.