Here is What Hedge Funds Think About Milacron Holdings Corp (MCRN)

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Milacron Holdings Corp (NYSE:MCRN).

Milacron Holdings Corp has seen a decrease in enthusiasm from smart money in recent months. At the end of this article we will also compare MCRN to other stocks including Redwood Trust, Inc. (NYSE:RWT), Ixia (NASDAQ:XXIA), and Universal Forest Products, Inc. (NASDAQ:UFPI) to get a better sense of its popularity.

Keeping this in mind, let’s take a peek at the recent action encompassing Milacron Holdings Corp (NYSE:MCRN).

What does the smart money think about Milacron Holdings Corp (NYSE:MCRN)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from one quarter earlier. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Levin Capital Strategies, managed by John A. Levin, holds the largest position in Milacron Holdings Corp (NYSE:MCRN). Levin Capital Strategies has a $22.3 million position in the stock, comprising 0.4% of its 13F portfolio. On Levin Capital Strategies’s heels is Phill Gross and Robert Atchinson of Adage Capital Management, with a $14 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish contain Ken Griffin’s Citadel Investment Group, Leon Cooperman’s Omega Advisors and David Costen Haley’s HBK Investments.

Due to the fact that Milacron Holdings Corp (NYSE:MCRN) has experienced a declination in interest from hedge fund managers, we can see that there was a specific group of funds that decided to sell off their positions entirely last quarter. At the top of the heap, Nick Niell’s Arrowgrass Capital Partners dropped the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at an estimated $14.8 million in stock, and Neil Chriss’s Hutchin Hill Capital was right behind this move, as the fund dumped about $10.3 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 5 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Milacron Holdings Corp (NYSE:MCRN) but similarly valued. These stocks are Redwood Trust, Inc. (NYSE:RWT), Ixia (NASDAQ:XXIA), Universal Forest Products, Inc. (NASDAQ:UFPI), and PennyMac Mortgage Investment Trust (NYSE:PMT). All of these stocks’ market caps resemble MCRN’s market cap.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $67 million in MCRN’s case. Ixia (NASDAQ:XXIA) is the most popular stock in this table. On the other hand Redwood Trust, Inc. (NYSE:RWT) is the least popular one with only 6 bullish hedge fund positions. Milacron Holdings Corp (NYSE:MCRN) 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 XXIA might be a better candidate to consider a long position.