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We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Monro Inc (NASDAQ:MNRO) based on that data.
Monro Inc (NASDAQ:MNRO) was in 14 hedge funds' portfolios at the end of the first quarter of 2020. MNRO investors should be aware of a decrease in hedge fund interest lately. There were 18 hedge funds in our database with MNRO positions at the end of the previous quarter. Our calculations also showed that MNRO 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.
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Philippe Laffont of Coatue Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a look at the recent hedge fund action surrounding Monro Inc (NASDAQ:MNRO).
What have hedge funds been doing with Monro Inc (NASDAQ:MNRO)?
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MNRO over the last 18 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Monro Inc (NASDAQ:MNRO) was held by Arlington Value Capital, which reported holding $61.7 million worth of stock at the end of September. It was followed by Royce & Associates with a $5.2 million position. Other investors bullish on the company included Balyasny Asset Management, Winton Capital Management, and GAMCO Investors. In terms of the portfolio weights assigned to each position Arlington Value Capital allocated the biggest weight to Monro Inc (NASDAQ:MNRO), around 8.97% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.08 percent of its 13F equity portfolio to MNRO.
Due to the fact that Monro Inc (NASDAQ:MNRO) has faced declining sentiment from the aggregate hedge fund industry, we can see that there exists a select few hedgies that elected to cut their positions entirely last quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP said goodbye to the biggest investment of the "upper crust" of funds tracked by Insider Monkey, valued at close to $14.5 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund dropped about $9.5 million worth. These transactions are interesting, as total hedge fund interest dropped by 4 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Monro Inc (NASDAQ:MNRO). These stocks are LivePerson, Inc. (NASDAQ:LPSN), M.D.C. Holdings, Inc. (NYSE:MDC), First Merchants Corporation (NASDAQ:FRME), and Inter Parfums, Inc. (NASDAQ:IPAR). This group of stocks' market valuations resemble MNRO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LPSN,15,96549,-8 MDC,14,61401,-3 FRME,12,64591,0 IPAR,13,46189,-2 Average,13.5,67183,-3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $87 million in MNRO's case. LivePerson, Inc. (NASDAQ:LPSN) is the most popular stock in this table. On the other hand First Merchants Corporation (NASDAQ:FRME) is the least popular one with only 12 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. 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 gained 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on MNRO, though not to the same extent, as the stock returned 24.7% during the first two months and twenty five days of the second quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.