While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Myers Industries, Inc. (NYSE:MYE).
Myers Industries, Inc. (NYSE:MYE) shareholders have witnessed a decrease in support from the world’s most elite money managers lately. MYE was in 12 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with MYE positions at the end of the previous quarter. Our calculations also showed that MYE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are plenty of indicators stock traders put to use to value stocks. A duo of the most under-the-radar indicators are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the top money managers can outpace the market by a healthy amount (see the details here).
Mario Gabelli of GAMCO Investors
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to take a look at the fresh hedge fund action regarding Myers Industries, Inc. (NYSE:MYE).
How have hedgies been trading Myers Industries, Inc. (NYSE:MYE)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in MYE over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Myers Industries, Inc. (NYSE:MYE) was held by GAMCO Investors, which reported holding $65.6 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $23.6 million position. Other investors bullish on the company included Wallace R. Weitz & Co., D E Shaw, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to Myers Industries, Inc. (NYSE:MYE), around 0.55% of its 13F portfolio. Wallace R. Weitz & Co. is also relatively very bullish on the stock, designating 0.15 percent of its 13F equity portfolio to MYE.
Seeing as Myers Industries, Inc. (NYSE:MYE) has witnessed a decline in interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of fund managers that decided to sell off their positions entirely by the end of the third quarter. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace dumped the largest position of all the hedgies followed by Insider Monkey, valued at an estimated $0.4 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also said goodbye to its stock, about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 2 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Myers Industries, Inc. (NYSE:MYE) but similarly valued. We will take a look at Rubius Therapeutics, Inc. (NASDAQ:RUBY), Pzena Investment Management Inc (NYSE:PZN), KNOT Offshore Partners LP (NYSE:KNOP), and MacroGenics Inc (NASDAQ:MGNX). This group of stocks’ market caps resemble MYE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RUBY | 5 | 11603 | 0 |
| PZN | 7 | 20337 | 1 |
| KNOP | 3 | 21086 | -2 |
| MGNX | 14 | 92212 | -5 |
| Average | 7.25 | 36310 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $99 million in MYE’s case. MacroGenics Inc (NASDAQ:MGNX) is the most popular stock in this table. On the other hand KNOT Offshore Partners LP (NYSE:KNOP) is the least popular one with only 3 bullish hedge fund positions. Myers Industries, Inc. (NYSE:MYE) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MYE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MYE were disappointed as the stock returned -6.2% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
