Do Hedge Funds Love Minerals Technologies Inc (MTX)?

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. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. In this article we are going to take a look at smart money sentiment towards Minerals Technologies Inc (NYSE:MTX).

Is Minerals Technologies Inc (NYSE:MTX) a buy right now? Prominent investors were in a bullish mood. The number of long hedge fund bets advanced by 1 recently. Minerals Technologies Inc (NYSE:MTX) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. 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 Q2 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 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.

Mario Gabelli of GAMCO Investors

Keeping this in mind let’s review the recent hedge fund action regarding Minerals Technologies Inc (NYSE:MTX).

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

At the end of June, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in MTX over the last 24 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Among these funds, Royce & Associates held the most valuable stake in Minerals Technologies Inc (NYSE:MTX), which was worth $63.2 million at the end of the second quarter. On the second spot was GAMCO Investors which amassed $16.6 million worth of shares. AQR Capital Management, GLG Partners, and Millennium Management 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 0.43% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, setting aside 0.26 percent of its 13F equity portfolio to MTX.

As one would reasonably expect, key money managers have jumped into Minerals Technologies Inc (NYSE:MTX) headfirst. Millennium Management, managed by Israel Englander, created the biggest position in Minerals Technologies Inc (NYSE:MTX). Millennium Management had $2.6 million invested in the company at the end of the quarter. Mika Toikka’s AlphaCrest Capital Management also made a $0.7 million investment in the stock during the quarter. The only other fund with a brand new MTX position is Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Minerals Technologies Inc (NYSE:MTX) but similarly valued. We will take a look at Constellium SE (NYSE:CSTM), Allegheny Technologies Incorporated (NYSE:ATI), Microvision, Inc. (NASDAQ:MVIS), Crescent Point Energy Corp (NYSE:CPG), The ODP Corporation (NASDAQ:ODP), The St. Joe Company (NYSE:JOE), and Cinemark Holdings, Inc. (NYSE:CNK). All of these stocks’ market caps match MTX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $403 million. That figure was $101 million in MTX’s case. Cinemark Holdings, Inc. (NYSE:CNK) is the most popular stock in this table. On the other hand Microvision, Inc. (NASDAQ:MVIS) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Minerals Technologies Inc (NYSE:MTX) is even less popular than MVIS. Our overall hedge fund sentiment score for MTX is 21. 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. Hedge funds dodged a bullet by taking a bearish stance towards MTX. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th but managed to beat the market again by 6.2 percentage points. Unfortunately MTX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); MTX investors were disappointed as the stock returned -9% since the end of the second quarter (through 9/27) 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 most of these stocks already outperformed the market since 2019.

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