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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Miller Industries, Inc. (NYSE:MLR).
Is MLR a good stock to buy now? Miller Industries, Inc. (NYSE:MLR) was in 11 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 11. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. MLR investors should be aware of an increase in enthusiasm from smart money recently. There were 10 hedge funds in our database with MLR positions at the end of the second quarter. Our calculations also showed that MLR 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most traders, hedge funds are seen as unimportant, outdated investment tools of years past. While there are more than 8000 funds trading today, Our experts choose to focus on the moguls of this group, approximately 850 funds. These money managers shepherd the majority of the smart money's total capital, and by tracking their unrivaled equity investments, Insider Monkey has spotted several investment strategies that have historically surpassed Mr. Market. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Joe Huber of Huber Capital 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 let's analyze the latest hedge fund action surrounding Miller Industries, Inc. (NYSE:MLR).
Do Hedge Funds Think MLR Is A Good Stock To Buy Now?
At Q3's end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the second quarter of 2020. On the other hand, there were a total of 10 hedge funds with a bullish position in MLR a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Chuck Royce's Royce & Associates has the biggest position in Miller Industries, Inc. (NYSE:MLR), worth close to $44.9 million, comprising 0.5% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, with a $3.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions comprise Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Cliff Asness's AQR Capital Management and David Harding's Winton Capital Management. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Miller Industries, Inc. (NYSE:MLR), around 0.67% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.48 percent of its 13F equity portfolio to MLR.
Now, some big names have been driving this bullishness. Zebra Capital Management, managed by Roger Ibbotson, created the largest position in Miller Industries, Inc. (NYSE:MLR). Zebra Capital Management had $0.4 million invested in the company at the end of the quarter. Joe Huber's Huber Capital Management also made a $0 million investment in the stock during the quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Miller Industries, Inc. (NYSE:MLR) but similarly valued. We will take a look at Merus N.V. (NASDAQ:MRUS), Franks International NV (NYSE:FI), Prevail Therapeutics Inc. (NASDAQ:PRVL), Intelligent Systems Corporation (NYSE:INS), Daseke, Inc. (NASDAQ:DSKE), ANI Pharmaceuticals Inc (NASDAQ:ANIP), and Hemisphere Media Group Inc (NASDAQ:HMTV). This group of stocks' market values are closest to MLR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MRUS,13,120093,-2 FI,9,5350,0 PRVL,12,205610,1 INS,8,47979,0 DSKE,11,15708,2 ANIP,8,12473,-2 HMTV,6,24902,-2 Average,9.6,61731,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.6 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $55 million in MLR's case. Merus N.V. (NASDAQ:MRUS) is the most popular stock in this table. On the other hand Hemisphere Media Group Inc (NASDAQ:HMTV) is the least popular one with only 6 bullish hedge fund positions. Miller Industries, Inc. (NYSE:MLR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MLR is 71.7. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on MLR as the stock returned 14.7% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.