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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 Materion Corp (NYSE:MTRN).
Is MTRN a good stock to buy now? Hedge fund interest in Materion Corp (NYSE:MTRN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that MTRN 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). At the end of this article we will also compare MTRN to other stocks including EverQuote, Inc. (NASDAQ:EVER), Avidity Biosciences, Inc. (NASDAQ:RNA), and Genetron Holdings Limited (NASDAQ:GTH) to get a better sense of its popularity.
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.
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. Now we're going to take a gander at the new hedge fund action regarding Materion Corp (NYSE:MTRN).
Do Hedge Funds Think MTRN Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in MTRN a year ago. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Materion Corp (NYSE:MTRN) was held by Renaissance Technologies, which reported holding $27.3 million worth of stock at the end of September. It was followed by GAMCO Investors with a $18.2 million position. Other investors bullish on the company included GLG Partners, Fisher Asset Management, and ACK Asset Management. In terms of the portfolio weights assigned to each position ACK Asset Management allocated the biggest weight to Materion Corp (NYSE:MTRN), around 4.06% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.2 percent of its 13F equity portfolio to MTRN.
Seeing as Materion Corp (NYSE:MTRN) has experienced bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there exists a select few money managers that decided to sell off their full holdings in the third quarter. At the top of the heap, David Harding's Winton Capital Management cut the biggest position of the "upper crust" of funds monitored by Insider Monkey, valued at an estimated $1.7 million in stock, and Cliff Asness's AQR Capital Management was right behind this move, as the fund sold off about $0.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Materion Corp (NYSE:MTRN) but similarly valued. We will take a look at EverQuote, Inc. (NASDAQ:EVER), Avidity Biosciences, Inc. (NASDAQ:RNA), Genetron Holdings Limited (NASDAQ:GTH), NANO-X IMAGING LTD (NASDAQ:NNOX), Lindsay Corporation (NYSE:LNN), Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT), and Ontrak, Inc. (NASDAQ:OTRK). This group of stocks' market values match MTRN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EVER,21,178745,-2 RNA,17,311619,-7 GTH,12,99741,-4 NNOX,6,23654,6 LNN,16,161024,5 ARCT,20,171723,-1 OTRK,12,12778,1 Average,14.9,137041,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $137 million. That figure was $81 million in MTRN's case. EverQuote, Inc. (NASDAQ:EVER) is the most popular stock in this table. On the other hand NANO-X IMAGING LTD (NASDAQ:NNOX) is the least popular one with only 6 bullish hedge fund positions. Materion Corp (NYSE:MTRN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MTRN is 53.8. 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. A small number of hedge funds were also right about betting on MTRN as the stock returned 18.6% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.