The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Modine Manufacturing Company (NYSE:MOD) from the perspective of those elite funds.
Modine Manufacturing Company (NYSE:MOD) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that MOD isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
Let’s check out the new hedge fund action regarding Modine Manufacturing Company (NYSE:MOD).
How have hedgies been trading Modine Manufacturing Company (NYSE:MOD)?
Heading into the fourth quarter of 2018, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the second quarter of 2018. By comparison, 14 hedge funds held shares or bullish call options in MOD heading into this year. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in Modine Manufacturing Company (NYSE:MOD). GAMCO Investors has a $23.3 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $18.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers with similar optimism comprise Douglas Dethy’s DC Capital Partners, D. E. Shaw’s D E Shaw and Cliff Asness’s AQR Capital Management.
As aggregate interest increased, some big names have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Modine Manufacturing Company (NYSE:MOD). Marshall Wace LLP had $0.9 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also initiated a $0.5 million position during the quarter. The other funds with brand new MOD positions are Peter Muller’s PDT Partners, Matthew Hulsizer’s PEAK6 Capital Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks similar to Modine Manufacturing Company (NYSE:MOD). We will take a look at LeMaitre Vascular Inc (NASDAQ:LMAT), Kornit Digital Ltd. (NASDAQ:KRNT), SunCoke Energy, Inc (NYSE:SXC), and UroGen Pharma Ltd. (NASDAQ:URGN). This group of stocks’ market valuations are closest to MOD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LMAT | 8 | 17922 | -2 |
| KRNT | 9 | 56673 | 3 |
| SXC | 21 | 115849 | 1 |
| URGN | 13 | 144642 | 0 |
| Average | 12.75 | 83772 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $94 million in MOD’s case. SunCoke Energy, Inc (NYSE:SXC) is the most popular stock in this table. On the other hand LeMaitre Vascular Inc (NASDAQ:LMAT) is the least popular one with only 8 bullish hedge fund positions. Modine Manufacturing Company (NYSE:MOD) 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. In this regard SXC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
