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In this article you are going to find out whether hedge funds think Monro Inc (NASDAQ:MNRO) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is MNRO a good stock to buy now? Monro Inc (NASDAQ:MNRO) shareholders have witnessed an increase in hedge fund interest lately. Monro Inc (NASDAQ:MNRO) was in 14 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 18. There were 11 hedge funds in our database with MNRO holdings at the end of June. Our calculations also showed that MNRO 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.
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 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Gavin Saitowitz of Prelude Capital
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. With all of this in mind let's take a look at the fresh hedge fund action regarding Monro Inc (NASDAQ:MNRO).
Do Hedge Funds Think MNRO Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MNRO over the last 21 quarters. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Ken Griffin's Citadel Investment Group has the largest position in Monro Inc (NASDAQ:MNRO), worth close to $3.2 million, comprising less than 0.1%% of its total 13F portfolio. On Citadel Investment Group's heels is Renaissance Technologies, which holds a $3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions contain Mario Gabelli's GAMCO Investors, David Harding's Winton Capital Management and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position TwinBeech Capital allocated the biggest weight to Monro Inc (NASDAQ:MNRO), around 0.1% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, earmarking 0.08 percent of its 13F equity portfolio to MNRO.
Now, some big names were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, created the largest position in Monro Inc (NASDAQ:MNRO). Citadel Investment Group had $3.2 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital) also initiated a $0.9 million position during the quarter. The following funds were also among the new MNRO investors: Michael Gelband's ExodusPoint Capital, Peter Muller's PDT Partners, and Donald Sussman's Paloma Partners.
Let's check out hedge fund activity in other stocks similar to Monro Inc (NASDAQ:MNRO). We will take a look at Marten Transport, Ltd (NASDAQ:MRTN), Patrick Industries, Inc. (NASDAQ:PATK), Purple Innovation, Inc. (NASDAQ:PRPL), Heron Therapeutics Inc (NASDAQ:HRTX), World Fuel Services Corporation (NYSE:INT), Compugen Ltd. (NASDAQ:CGEN), and Terex Corporation (NYSE:TEX). This group of stocks' market values resemble MNRO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MRTN,19,58010,0 PATK,17,94066,2 PRPL,36,724349,8 HRTX,17,274649,-4 INT,16,79951,-2 CGEN,14,76267,5 TEX,18,212256,-1 Average,19.6,217078,1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $18 million in MNRO's case. Purple Innovation, Inc. (NASDAQ:PRPL) is the most popular stock in this table. On the other hand Compugen Ltd. (NASDAQ:CGEN) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Monro Inc (NASDAQ:MNRO) is even less popular than CGEN. Our overall hedge fund sentiment score for MNRO is 31.3. 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. Hedge funds clearly dropped the ball on MNRO as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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. A small number of hedge funds were also right about betting on MNRO as the stock returned 17.4% since Q3 (through December 8th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.