Here Is What Hedge Funds Think About MSC Industrial Direct Co Inc (MSM)

Is MSC Industrial Direct Co Inc (NYSE:MSM) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is MSC Industrial Direct Co Inc (NYSE:MSM) a buy, sell, or hold? The smart money is turning bullish. The number of long hedge fund positions increased by 7 recently. MSM was in 22 hedge funds’ portfolios at the end of the third quarter of 2015. There were 15 hedge funds in our database with MSM holdings at the end of the previous quarter. At the end of this article we will also compare MSM to other stocks including Cinemark Holdings, Inc. (NYSE:CNK), Amsurg Corp (NASDAQ:AMSG), and Restoration Hardware Holdings Inc (NYSE:RH) to get a better sense of its popularity.

With all of this in mind, let’s view the recent action surrounding MSC Industrial Direct Co Inc (NYSE:MSM).

What have hedge funds been doing with MSC Industrial Direct Co Inc (NYSE:MSM)?

Heading into Q4, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 47% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the most valuable position in MSC Industrial Direct Co Inc (NYSE:MSM), worth close to $211.1 million, amounting to 2% of its total 13F portfolio. The second most bullish fund manager is William von Mueffling of Cantillon Capital Management, with a $138 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions encompass Chuck Royce’s Royce & Associates, Allan Mecham and Ben Raybould’s Arlington Value Capital and Ken Fisher’s Fisher Asset Management.

Consequently, key money managers have jumped into MSC Industrial Direct Co Inc (NYSE:MSM) headfirst. Arlington Value Capital, managed by Allan Mecham and Ben Raybould, initiated the most outsized position in MSC Industrial Direct Co Inc (NYSE:MSM). Arlington Value Capital had $73.7 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $6.6 million position during the quarter. The other funds with brand new MSM positions are Israel Englander’s Millennium Management, Jim Simons’ Renaissance Technologies, and Paul Tudor Jones’ Tudor Investment Corp.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as MSC Industrial Direct Co Inc (NYSE:MSM) but similarly valued. We will take a look at Cinemark Holdings, Inc. (NYSE:CNK), Amsurg Corp (NASDAQ:AMSG), Restoration Hardware Holdings Inc (NYSE:RH), and Sally Beauty Holdings, Inc. (NYSE:SBH). This group of stocks’ market values resemble MSM’s market value.

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $475 million. That figure was $606 million in MSM’s case. Restoration Hardware Holdings Inc (NYSE:RH) is the most popular stock in this table. On the other hand Cinemark Holdings, Inc. (NYSE:CNK) is the least popular one with only 19 bullish hedge fund positions. MSC Industrial Direct Co Inc (NYSE:MSM) 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 RH might be a better candidate to consider a long position.