Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 9.9 percentage points through the end of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Manpowergroup Inc (NYSE:MAN) was in 19 hedge funds’ portfolios at the end of September. MAN has seen an increase in activity from the world’s largest hedge funds in recent months. There were 17 hedge funds in our database with MAN positions at the end of the previous quarter. Our calculations also showed that MAN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David E. Shaw of D.E. Shaw
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the recent hedge fund action regarding Manpowergroup Inc (NYSE:MAN).
How have hedgies been trading Manpowergroup Inc (NYSE:MAN)?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MAN over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the number one position in Manpowergroup Inc (NYSE:MAN). AQR Capital Management has a $229.8 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $42.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism encompass David E. Shaw’s D E Shaw, Chuck Royce’s Royce & Associates and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position AQR Capital Management allocated the biggest weight to Manpowergroup Inc (NYSE:MAN), around 0.27% of its 13F portfolio. Brant Point Investment Management is also relatively very bullish on the stock, setting aside 0.23 percent of its 13F equity portfolio to MAN.
Now, key money managers were leading the bulls’ herd. Magnetar Capital, managed by Alec Litowitz and Ross Laser, established the most valuable position in Manpowergroup Inc (NYSE:MAN). Magnetar Capital had $0.7 million invested in the company at the end of the quarter. Bruce Kovner’s Caxton Associates also made a $0.6 million investment in the stock during the quarter. The other funds with brand new MAN positions are Minhua Zhang’s Weld Capital Management, Paul Tudor Jones’s Tudor Investment Corp, and Michael Gelband’s ExodusPoint Capital.
Let’s now review hedge fund activity in other stocks similar to Manpowergroup Inc (NYSE:MAN). We will take a look at Portland General Electric Company (NYSE:POR), Science Applications International Corporation (NYSE:SAIC), MKS Instruments, Inc. (NASDAQ:MKSI), and Capri Holdings Limited (NYSE:CPRI). This group of stocks’ market valuations are similar to MAN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| POR | 23 | 391261 | 5 |
| SAIC | 24 | 350974 | -2 |
| MKSI | 17 | 411513 | -2 |
| CPRI | 37 | 920218 | 2 |
| Average | 25.25 | 518492 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $518 million. That figure was $377 million in MAN’s case. Capri Holdings Limited (NYSE:CPRI) is the most popular stock in this table. On the other hand MKS Instruments, Inc. (NASDAQ:MKSI) is the least popular one with only 17 bullish hedge fund positions. Manpowergroup Inc (NYSE:MAN) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on MAN as the stock returned 11.3% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
