Were Hedge Funds Right About The Manitowoc Company, Inc. (MTW)?
At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not The Manitowoc Company, Inc. (NYSE:MTW) makes for a good investment right now.
Is The Manitowoc Company, Inc. (NYSE:MTW) a buy here? The best stock pickers were taking a bearish view. The number of bullish hedge fund bets dropped by 4 lately. The Manitowoc Company, Inc. (NYSE:MTW) was in 17 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 28. Our calculations also showed that MTW isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 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.
Justin John Ferayorni of Tamarack Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 let's take a gander at the key hedge fund action encompassing The Manitowoc Company, Inc. (NYSE:MTW).
Do Hedge Funds Think MTW Is A Good Stock To Buy Now?
At the end of March, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in MTW a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, D. E. Shaw's D E Shaw has the biggest position in The Manitowoc Company, Inc. (NYSE:MTW), worth close to $12.6 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $8.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish contain Dan Rasmussen's Verdad Advisers, Renaissance Technologies and John Smith Clark's Southpoint Capital Advisors. In terms of the portfolio weights assigned to each position Verdad Advisers allocated the biggest weight to The Manitowoc Company, Inc. (NYSE:MTW), around 2.63% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, setting aside 1.62 percent of its 13F equity portfolio to MTW.
Seeing as The Manitowoc Company, Inc. (NYSE:MTW) has experienced falling interest from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of fund managers that elected to cut their entire stakes heading into Q2. It's worth mentioning that Clint Murray's Lodge Hill Capital cut the largest stake of the 750 funds monitored by Insider Monkey, worth about $6.1 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund sold off about $3.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds heading into Q2.
Let's go over hedge fund activity in other stocks similar to The Manitowoc Company, Inc. (NYSE:MTW). We will take a look at Digital Media Solutions, Inc. (NYSE:DMS), Orchard Therapeutics plc (NASDAQ:ORTX), Camden National Corporation (NASDAQ:CAC), Seritage Growth Properties (NYSE:SRG), Petmed Express Inc (NASDAQ:PETS), Myers Industries, Inc. (NYSE:MYE), and Genesco Inc. (NYSE:GCO). This group of stocks' market values resemble MTW's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DMS,9,6121,0 ORTX,17,205489,2 CAC,15,48135,-1 SRG,10,128550,-4 PETS,14,69468,-8 MYE,10,105798,0 GCO,15,62554,0 Average,12.9,89445,-1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.9 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $58 million in MTW's case. Orchard Therapeutics plc (NASDAQ:ORTX) is the most popular stock in this table. On the other hand Digital Media Solutions, Inc. (NYSE:DMS) is the least popular one with only 9 bullish hedge fund positions. The Manitowoc Company, Inc. (NYSE:MTW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTW is 69.2. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately MTW wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MTW were disappointed as the stock returned 9.8% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
