Does Multi-Color Corporation (NASDAQ:LABL) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Multi-Color Corporation (NASDAQ:LABL) was in 12 hedge funds’ portfolios at the end of March. LABL shareholders have witnessed an increase in enthusiasm from smart money of late. There were 10 hedge funds in our database with LABL positions at the end of the previous quarter. Our calculations also showed that LABL isn’t among the 30 most popular stocks among hedge funds.
If you’d ask most stock holders, hedge funds are assumed to be underperforming, old financial vehicles of yesteryear. While there are over 8000 funds trading at the moment, We look at the upper echelon of this group, around 750 funds. It is estimated that this group of investors preside over most of the hedge fund industry’s total capital, and by shadowing their unrivaled picks, Insider Monkey has identified numerous investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let’s check out the key hedge fund action surrounding Multi-Color Corporation (NASDAQ:LABL).
How have hedgies been trading Multi-Color Corporation (NASDAQ:LABL)?
At Q1’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. By comparison, 2 hedge funds held shares or bullish call options in LABL 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Alpine Associates, managed by Robert Emil Zoellner, holds the largest position in Multi-Color Corporation (NASDAQ:LABL). Alpine Associates has a $27.3 million position in the stock, comprising 0.9% of its 13F portfolio. Coming in second is Glazer Capital, led by Paul Glazer, holding a $14.2 million position; 2.1% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism include John Orrico’s Water Island Capital, Mario Gabelli’s GAMCO Investors and Israel Englander’s Millennium Management.
Now, specific money managers have been driving this bullishness. Alpine Associates, managed by Robert Emil Zoellner, initiated the biggest position in Multi-Color Corporation (NASDAQ:LABL). Alpine Associates had $27.3 million invested in the company at the end of the quarter. Paul Glazer’s Glazer Capital also made a $14.2 million investment in the stock during the quarter. The other funds with brand new LABL positions are John Orrico’s Water Island Capital, Mario Gabelli’s GAMCO Investors, and Nick Niell’s Arrowgrass Capital Partners.
Let’s check out hedge fund activity in other stocks similar to Multi-Color Corporation (NASDAQ:LABL). We will take a look at Revlon Inc (NYSE:REV), Boingo Wireless Inc (NASDAQ:WIFI), Apogee Enterprises, Inc. (NASDAQ:APOG), and OFG Bancorp (NYSE:OFG). This group of stocks’ market values are closest to LABL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| REV | 28 | 267692 | 2 |
| WIFI | 17 | 136649 | -1 |
| APOG | 11 | 144883 | -5 |
| OFG | 20 | 74193 | 3 |
| Average | 19 | 155854 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $156 million. That figure was $68 million in LABL’s case. Revlon Inc (NYSE:REV) is the most popular stock in this table. On the other hand Apogee Enterprises, Inc. (NASDAQ:APOG) is the least popular one with only 11 bullish hedge fund positions. Multi-Color Corporation (NASDAQ:LABL) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately LABL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LABL investors were disappointed as the stock returned 0.3% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
