At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Is Matthews International Corp (NASDAQ:MATW) the right pick for your portfolio? Prominent investors are surely buying. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings increased by 3 in recent months. There were 7 hedge funds in our database with MATW holdings at the end of the previous quarter. At the end of this article we will also compare MATW to other stocks including IMAX Corporation (USA) (NYSE:IMAX), Ingevity Corp(NYSE:NGVT), and DoubleLine Income Solutions Fund(NYSE:DSL) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, let’s view the key action regarding Matthews International Corp (NASDAQ:MATW).
How are hedge funds trading Matthews International Corp (NASDAQ:MATW)?
Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in MATW at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, John W. Rogers’ Ariel Investments has the number one position in Matthews International Corp (NASDAQ:MATW), worth close to $15.6 million. Sitting at the No. 2 spot is Roger Ibbotson’s Zebra Capital Management which holds a $1.5 million position. Remaining members of the smart money with similar optimism comprise Mario Gabelli’s GAMCO Investors, and Jim Simons’ Renaissance Technologies which is one of the largest hedge funds in the world. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now, some big names were breaking ground themselves. Gotham Asset Management created the most outsized position in Matthews International Corp (NASDAQ:MATW) which had $1.1 million invested in the company at the end of the quarter. The following funds were also among the new MATW investors: Ken Griffin’s Citadel Investment Group, Glenn Russell Dubin’s Highbridge Capital Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Matthews International Corp (NASDAQ:MATW) but similarly valued. We will take a look at IMAX Corporation (USA) (NYSE:IMAX), Ingevity Corp(NYSE:NGVT), DoubleLine Income Solutions Fund(NYSE:DSL), and Office Depot Inc (NYSE:ODP). All of these stocks’ market caps resemble MATW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IMAX | 14 | 105884 | 1 |
| NGVT | 17 | 219163 | -2 |
| DSL | 4 | 20487 | -1 |
| ODP | 34 | 284342 | -13 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $157 million. That figure was $22 million in MATW’s case. Office Depot Inc (NYSE:ODP) is the most popular stock in this table. On the other hand DoubleLine Income Solutions Fund(NYSE:DSL) is the least popular one with only 4 bullish hedge fund positions. Matthews International Corp (NASDAQ:MATW) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ODP might be a better candidate to consider taking a long position in.
Disclosure: None
