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In this article we will take a look at whether hedge funds think Materialise NV (NASDAQ:MTLS) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Materialise NV (MTLS) a good stock to buy now? Prominent investors were buying. The number of bullish hedge fund positions went up by 1 in recent months. Materialise NV (NASDAQ:MTLS) was in 5 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 6. Our calculations also showed that MTLS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 4 hedge funds in our database with MTLS holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we're going to check out the new hedge fund action encompassing Materialise NV (NASDAQ:MTLS).
What does smart money think about Materialise NV (NASDAQ:MTLS)?
Heading into the fourth quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MTLS over the last 21 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the number one position in Materialise NV (NASDAQ:MTLS). Renaissance Technologies has a $5.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, led by Chuck Royce, holding a $0.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish include Jeff Osher's No Street Capital, Israel Englander's Millennium Management and Claes Fornell's CSat Investment Advisory. In terms of the portfolio weights assigned to each position No Street Capital allocated the biggest weight to Materialise NV (NASDAQ:MTLS), around 0.05% of its 13F portfolio. CSat Investment Advisory is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to MTLS.
As industrywide interest jumped, key hedge funds have jumped into Materialise NV (NASDAQ:MTLS) headfirst. No Street Capital, managed by Jeff Osher, initiated the biggest position in Materialise NV (NASDAQ:MTLS). No Street Capital had $0.5 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $0.3 million investment in the stock during the quarter.
Let's also examine hedge fund activity in other stocks similar to Materialise NV (NASDAQ:MTLS). These stocks are FS KKR Capital Corp. (NASDAQ:FSK), Sprout Social, Inc. (NASDAQ:SPT), Osisko Gold Royalties Ltd (NYSE:OR), Tower Semiconductor Ltd. (NASDAQ:TSEM), Olin Corporation (NYSE:OLN), Eidos Therapeutics, Inc. (NASDAQ:EIDX), and Main Street Capital Corporation (NYSE:MAIN). All of these stocks' market caps are similar to MTLS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSK,11,89179,0 SPT,18,126704,-1 OR,17,243791,2 TSEM,14,295737,-1 OLN,33,459651,0 EIDX,13,254264,-4 MAIN,4,10635,-3 Average,15.7,211423,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.7 hedge funds with bullish positions and the average amount invested in these stocks was $211 million. That figure was $7 million in MTLS's case. Olin Corporation (NYSE:OLN) is the most popular stock in this table. On the other hand Main Street Capital Corporation (NYSE:MAIN) is the least popular one with only 4 bullish hedge fund positions. Materialise NV (NASDAQ:MTLS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MTLS is 32.7. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on MTLS as the stock returned 19.2% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.