Did The Smart Money Play Mettler-Toledo International Inc. (MTD) Correctly?

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 at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Mettler-Toledo International Inc. (NYSE:MTD) and determine whether the smart money was really smart about this stock.

Mettler-Toledo International Inc. (NYSE:MTD) has seen a decrease in hedge fund interest lately. Mettler-Toledo International Inc. (NYSE:MTD) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that MTD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to analyze the new hedge fund action surrounding Mettler-Toledo International Inc. (NYSE:MTD).

Bruce Kovner of Caxton Associates LP

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

Heading into the fourth quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from one quarter earlier. On the other hand, there were a total of 30 hedge funds with a bullish position in MTD a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

The largest stake in Mettler-Toledo International Inc. (NYSE:MTD) was held by Impax Asset Management, which reported holding $185.5 million worth of stock at the end of September. It was followed by Echo Street Capital Management with a $170.3 million position. Other investors bullish on the company included AQR Capital Management, Chilton Investment Company, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Chilton Investment Company allocated the biggest weight to Mettler-Toledo International Inc. (NYSE:MTD), around 4.06% of its 13F portfolio. Echo Street Capital Management is also relatively very bullish on the stock, designating 1.2 percent of its 13F equity portfolio to MTD.

Since Mettler-Toledo International Inc. (NYSE:MTD) has faced declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of money managers that elected to cut their entire stakes heading into Q4. It’s worth mentioning that Steve Cohen’s Point72 Asset Management cut the biggest investment of the 750 funds watched by Insider Monkey, comprising close to $17.1 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund dumped about $3.7 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 4 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Mettler-Toledo International Inc. (NYSE:MTD). These stocks are HubSpot Inc (NYSE:HUBS), HP Inc. (NYSE:HPQ), The Williams Companies, Inc. (NYSE:WMB), West Pharmaceutical Services Inc. (NYSE:WST), Liberty Broadband Corp (NASDAQ:LBRDK), LyondellBasell Industries NV (NYSE:LYB), and Brown-Forman Corporation (NYSE:BF). This group of stocks’ market caps are similar to MTD’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 40.6 hedge funds with bullish positions and the average amount invested in these stocks was $2114 million. That figure was $1109 million in MTD’s case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand West Pharmaceutical Services Inc. (NYSE:WST) is the least popular one with only 29 bullish hedge fund positions. Mettler-Toledo International Inc. (NYSE:MTD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MTD is 30.5. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on MTD as the stock returned 6.9% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.