Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is The Middleby Corporation (NASDAQ:MIDD), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is The Middleby Corporation (NASDAQ:MIDD) worth your attention right now? Investors who are in the know are taking a bullish view. The number of long hedge fund bets inched up by 7 recently. Our calculations also showed that MIDD isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the new hedge fund action regarding The Middleby Corporation (NASDAQ:MIDD).
Hedge fund activity in The Middleby Corporation (NASDAQ:MIDD)
At the end of the second quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MIDD over the last 16 quarters. So, let’s see 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, Eminence Capital, managed by Ricky Sandler, holds the most valuable position in The Middleby Corporation (NASDAQ:MIDD). Eminence Capital has a $172.9 million position in the stock, comprising 2.3% of its 13F portfolio. Sitting at the No. 2 spot is Brian Bares of Bares Capital Management, with a $56.9 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass D. E. Shaw’s D E Shaw, Greg Poole’s Echo Street Capital Management and Israel Englander’s Millennium Management.
As industrywide interest jumped, some big names have jumped into The Middleby Corporation (NASDAQ:MIDD) headfirst. Renaissance Technologies, assembled the most outsized position in The Middleby Corporation (NASDAQ:MIDD). Renaissance Technologies had $27.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $3.8 million position during the quarter. The other funds with brand new MIDD positions are Paul Tudor Jones’s Tudor Investment Corp, Dmitry Balyasny’s Balyasny Asset Management, and Benjamin A. Smith’s Laurion Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to The Middleby Corporation (NASDAQ:MIDD). We will take a look at Momo Inc (NASDAQ:MOMO), BeiGene, Ltd. (NASDAQ:BGNE), Pool Corporation (NASDAQ:POOL), and Apartment Investment and Management Co. (NYSE:AIV). This group of stocks’ market values resemble MIDD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOMO | 22 | 855304 | 1 |
| BGNE | 12 | 1643941 | -3 |
| POOL | 22 | 342084 | 6 |
| AIV | 24 | 701466 | 3 |
| Average | 20 | 885699 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $886 million. That figure was $554 million in MIDD’s case. Apartment Investment and Management Co. (NYSE:AIV) is the most popular stock in this table. On the other hand BeiGene, Ltd. (NASDAQ:BGNE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks The Middleby Corporation (NASDAQ:MIDD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MIDD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MIDD were disappointed as the stock returned -13.9% during the third quarter 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 in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
