The Middleby Corporation (NASDAQ:MIDD) has experienced an increase in hedge fund interest of late.
According to most investors, hedge funds are seen as worthless, old financial tools of yesteryear. While there are greater than 8000 funds in operation at the moment, we hone in on the leaders of this group, around 450 funds. It is widely believed that this group controls most of all hedge funds’ total capital, and by keeping an eye on their top stock picks, we have spotted a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as key, optimistic insider trading activity is another way to break down the stock market universe. There are plenty of motivations for an executive to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the useful potential of this tactic if you understand what to do (learn more here).
With these “truths” under our belt, it’s important to take a look at the key action surrounding The Middleby Corporation (NASDAQ:MIDD).
How have hedgies been trading The Middleby Corporation (NASDAQ:MIDD)?
In preparation for this quarter, a total of 20 of the hedge funds we track held long positions in this stock, a change of 33% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings considerably.
According to our comprehensive database, Alan Fournier’s Pennant Capital Management had the biggest position in The Middleby Corporation (NASDAQ:MIDD), worth close to $46 million, comprising 0.9% of its total 13F portfolio. Sitting at the No. 2 spot is Brian Bares of Bares Capital Management, with a $38.5 million position; the fund has 4.9% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include John W. Rogers’s Ariel Investments, Drew Cupps’s Cupps Capital Management and Israel Englander’s Millennium Management.
Consequently, key money managers were breaking ground themselves. Capital Growth Management, managed by Ken Heebner, established the largest position in The Middleby Corporation (NASDAQ:MIDD). Capital Growth Management had 3 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also made a $3 million investment in the stock during the quarter. The following funds were also among the new MIDD investors: Mike Vranos’s Ellington, Andy Redleaf’s Whitebox Advisors, and Matthew Tewksbury’s Stevens Capital Management.
How have insiders been trading The Middleby Corporation (NASDAQ:MIDD)?
Insider trading activity, especially when it’s bullish, is best served when the company in focus has experienced transactions within the past 180 days. Over the last six-month time period, The Middleby Corporation (NASDAQ:MIDD) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to The Middleby Corporation (NASDAQ:MIDD). These stocks are Crane Co. (NYSE:CR), Lennox International Inc. (NYSE:LII), ITT Corp (NYSE:ITT), 3D Systems Corporation (NYSE:DDD), and Sauer-Danfoss Inc. (NYSE:SHS). This group of stocks are the members of the diversified machinery industry and their market caps resemble MIDD’s market cap.
