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Is MTX A Good Stock To Buy Now?

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Reymerlyn Martin
·5 min read
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In this article you are going to find out whether hedge funds think Minerals Technologies Inc (NYSE:MTX) 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 MTX a good stock to buy now? Minerals Technologies Inc (NYSE:MTX) shareholders have witnessed a decrease in support from the world's most elite money managers of late. Minerals Technologies Inc (NYSE:MTX) was in 14 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 20. Our calculations also showed that MTX 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 today’s marketplace there are a multitude of signals investors can use to analyze publicly traded companies. A couple of the best signals are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best money managers can beat the market by a healthy margin (see the details here).

Mario Gabelli of GAMCO Investors

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 we're going to take a glance at the new hedge fund action encompassing Minerals Technologies Inc (NYSE:MTX).

Do Hedge Funds Think MTX 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 -18% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in MTX a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Royce & Associates was the largest shareholder of Minerals Technologies Inc (NYSE:MTX), with a stake worth $35.1 million reported as of the end of September. Trailing Royce & Associates was AQR Capital Management, which amassed a stake valued at $18.9 million. GAMCO Investors, Arrowstreet Capital, and GLG Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Minerals Technologies Inc (NYSE:MTX), around 0.38% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, dishing out 0.19 percent of its 13F equity portfolio to MTX.

Since Minerals Technologies Inc (NYSE:MTX) has witnessed bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there exists a select few funds that elected to cut their entire stakes last quarter. It's worth mentioning that Renaissance Technologies dumped the largest investment of all the hedgies followed by Insider Monkey, comprising close to $1.5 million in stock, and Michael Gelband's ExodusPoint Capital was right behind this move, as the fund cut about $0.7 million worth. These transactions are interesting, as total hedge fund interest fell by 3 funds last quarter.

Let's also examine hedge fund activity in other stocks similar to Minerals Technologies Inc (NYSE:MTX). We will take a look at CIT Group Inc. (NYSE:CIT), Winnebago Industries, Inc. (NYSE:WGO), SJW Corp. (NYSE:SJW), Simmons First National Corporation (NASDAQ:SFNC), Matson Inc. (NYSE:MATX), Cathay General Bancorp (NASDAQ:CATY), and Independent Bank Corp (NASDAQ:INDB). This group of stocks' market values match MTX's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CIT,27,262969,0 WGO,28,269965,-5 SJW,9,63885,-2 SFNC,13,23996,0 MATX,9,12408,0 CATY,17,46672,6 INDB,12,13494,5 Average,16.4,99056,0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.4 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $94 million in MTX's case. Winnebago Industries, Inc. (NYSE:WGO) is the most popular stock in this table. On the other hand SJW Corp. (NYSE:SJW) is the least popular one with only 9 bullish hedge fund positions. Minerals Technologies Inc (NYSE:MTX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MTX is 36.2. 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 MTX as the stock returned 24.2% 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.

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