Is Leggett & Platt, Inc. (LEG) A Good Stock To Buy?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Leggett & Platt, Inc. (NYSE:LEG).

Leggett & Platt, Inc. (NYSE:LEG) has seen an increase in hedge fund interest recently. LEG was in 21 hedge funds’ portfolios at the end of the third quarter of 2016. There were 15 hedge funds in our database with LEG holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Gildan Activewear Inc (USA) (NYSE:GIL), Fluor Corporation (NEW) (NYSE:FLR), and The Goodyear Tire & Rubber Company (NASDAQ:GT) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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How are hedge funds trading Leggett & Platt, Inc. (NYSE:LEG)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a 40% burst from the previous quarter, though ownership remained below its level of a year earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Cliff Asness’ AQR Capital Management has the largest position in Leggett & Platt, Inc. (NYSE:LEG), worth close to $46 million. Sitting at the No. 2 spot is John Overdeck and David Siegel of Two Sigma Advisors, with an $11.2 million position. Remaining members of the smart money that hold long positions consist of David Harding’s Winton Capital Management, Jim Simons’ Renaissance Technologies and Phill Gross and Robert Atchinson’s Adage Capital Management.

As aggregate interest increased, key hedge funds have jumped into Leggett & Platt, Inc. (NYSE:LEG) headfirst. Two Sigma Advisors established the most outsized position in Leggett & Platt, Inc. (NYSE:LEG). Two Sigma Advisors had $11.2 million invested in the company at the end of the quarter. George Hall’s Clinton Group also made a $7.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Chuck Royce’s Royce & Associates, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Glenn Russell Dubin’s Highbridge Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Leggett & Platt, Inc. (NYSE:LEG). These stocks are Gildan Activewear Inc (USA) (NYSE:GIL), Fluor Corporation (NEW) (NYSE:FLR), The Goodyear Tire & Rubber Company (NASDAQ:GT), and VimpelCom Ltd (ADR) (NYSE:VIP). This group of stocks’ market values are closest to LEG’s market value.

As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $569 million. That figure was $123 million in LEG’s case. The Goodyear Tire & Rubber Company (NASDAQ:GT) is the most popular stock in this table. On the other hand Gildan Activewear Inc (USA) (NYSE:GIL) is the least popular one with only 10 bullish hedge fund positions. Leggett & Platt, Inc. (NYSE:LEG) 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 GT might be a better candidate to consider a long position.

Disclosure: None