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 Manning and Napier Inc (NYSE:MN).
Manning and Napier Inc (NYSE:MN) investors should pay attention to a decrease in hedge fund interest lately. MN was in 8 hedge funds' portfolios at the end of the first quarter of 2020. There were 10 hedge funds in our database with MN holdings at the end of the previous quarter. Our calculations also showed that MN isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_738761" align="aligncenter" width="395"] Fred DiSanto of Ancora Advisors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's review the new hedge fund action regarding Manning and Napier Inc (NYSE:MN).
What does smart money think about Manning and Napier Inc (NYSE:MN)?
Heading into the second quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the fourth quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in MN 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.
The largest stake in Manning and Napier Inc (NYSE:MN) was held by Renaissance Technologies, which reported holding $1.5 million worth of stock at the end of September. It was followed by Ancora Advisors with a $1.1 million position. Other investors bullish on the company included Mendon Capital Advisors, Millennium Management, and Royce & Associates. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Manning and Napier Inc (NYSE:MN), around 0.32% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to MN.
Because Manning and Napier Inc (NYSE:MN) has experienced falling interest from the aggregate hedge fund industry, it's safe to say that there is a sect of hedgies who were dropping their entire stakes heading into Q4. Intriguingly, David Nguyen and Nancy Oh's One68 Global Capital cut the biggest investment of the 750 funds watched by Insider Monkey, totaling about $0.2 million in stock, and Ari Zweiman's 683 Capital Partners was right behind this move, as the fund dumped about $0.2 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds heading into Q4.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Manning and Napier Inc (NYSE:MN) but similarly valued. These stocks are Novan, Inc. (NASDAQ:NOVN), Hexindai Inc. (NASDAQ:HX), Charles & Colvard, Ltd. (NASDAQ:CTHR), and Hermitage Offshore Services Ltd. (NYSE:PSV). This group of stocks' market caps are similar to MN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NOVN,2,2146,1 HX,3,485,0 CTHR,1,474,-1 PSV,1,7,0 Average,1.75,778,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.75 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $4 million in MN's case. Hexindai Inc. (NASDAQ:HX) is the most popular stock in this table. On the other hand Charles & Colvard, Ltd. (NASDAQ:CTHR) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Manning and Napier Inc (NYSE:MN) is more popular among hedge funds. 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 returned 12.2% in 2020 through June 17th but still managed to beat the market by 14.8 percentage points. Hedge funds were also right about betting on MN as the stock returned 126.4% so far in Q2 (through June 17th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.