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Where Do Hedge Funds Stand On Manhattan Associates, Inc. (MANH)?

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Manhattan Associates, Inc. (NASDAQ:MANH) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Manhattan Associates, Inc. (NASDAQ:MANH) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 28 hedge funds' portfolios at the end of the second quarter of 2021. Our calculations also showed that MANH isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Neurocrine Biosciences, Inc. (NASDAQ:NBIX), Arch Coal Inc (NYSE:ACI), and Sensata Technologies Holding plc (NYSE:ST) to gather more data points.

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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Chuck Royce
Chuck Royce

Chuck Royce of Royce & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to check out the latest hedge fund action encompassing Manhattan Associates, Inc. (NASDAQ:MANH).

Do Hedge Funds Think MANH Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in MANH a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Is MANH A Good Stock To Buy?
Is MANH A Good Stock To Buy?

Among these funds, RGM Capital held the most valuable stake in Manhattan Associates, Inc. (NASDAQ:MANH), which was worth $114.8 million at the end of the second quarter. On the second spot was Arrowstreet Capital which amassed $80.5 million worth of shares. Shannon River Fund Management, Royce & Associates, 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 RGM Capital allocated the biggest weight to Manhattan Associates, Inc. (NASDAQ:MANH), around 5.31% of its 13F portfolio. Shannon River Fund Management is also relatively very bullish on the stock, designating 4.56 percent of its 13F equity portfolio to MANH.

Due to the fact that Manhattan Associates, Inc. (NASDAQ:MANH) has faced bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there were a few hedgies that slashed their positions entirely in the second quarter. Interestingly, Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors cut the largest investment of all the hedgies watched by Insider Monkey, worth about $1.3 million in stock. Donald Sussman's fund, Paloma Partners, also cut its stock, about $1 million worth. These moves are interesting, 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 similar to Manhattan Associates, Inc. (NASDAQ:MANH). We will take a look at Neurocrine Biosciences, Inc. (NASDAQ:NBIX), Arch Coal Inc (NYSE:ACI), Sensata Technologies Holding plc (NYSE:ST), Federal Realty Investment Trust (NYSE:FRT), Algonquin Power & Utilities Corp. (NYSE:AQN), BridgeBio Pharma, Inc. (NASDAQ:BBIO), and CAE, Inc. (NYSE:CAE). This group of stocks' market valuations resemble MANH's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NBIX,32,900271,13 ACI,20,2910547,1 ST,32,1822315,-4 FRT,16,86746,0 AQN,24,310750,14 BBIO,27,2790433,1 CAE,10,101618,-7 Average,23,1274669,2.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $1275 million. That figure was $409 million in MANH's case. Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is the most popular stock in this table. On the other hand CAE, Inc. (NYSE:CAE) is the least popular one with only 10 bullish hedge fund positions. Manhattan Associates, Inc. (NASDAQ:MANH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MANH is 75.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on MANH as the stock returned 12% since the end of Q2 (through 10/15) 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.