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 Mead Johnson Nutrition CO (NYSE:MJN) from the perspective of those investors.
When it comes to Mead Johnson Nutrition CO (NYSE:MJN), it looks like the smart money is becoming hopeful, as the number of long hedge fund bets increased by five during the third quarter. The company was included in the equity portfolios of 33 funds tracked by Insider Monkey at the end of September, compared to 28 funds a quarter earlier. However, we should mention that 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 Marriott International Inc (NYSE:MAR), ORIX Corporation (ADR) (NYSE:IX), and Stanley Black & Decker, Inc. (NYSE:SWK) to gather more data points.
Follow Mead Johnson Nutrition Co (NYSE:MJN)
Follow Mead Johnson Nutrition Co (NYSE:MJN)
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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Keeping this in mind, we’re going to review the latest action regarding Mead Johnson Nutrition CO (NYSE:MJN).
What does the smart money think about Mead Johnson Nutrition CO (NYSE:MJN)?
During the third quarter, the number of funds tracked by Insider Monkey that held shares of Mead Johnson Nutrition Co advanced by 18% to 33. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, D. E. Shaw’s D E Shaw holds the biggest position in Mead Johnson Nutrition CO (NYSE:MJN). D E Shaw has a $93.1 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $87.4 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions encompass Dmitry Balyasny’s Balyasny Asset Management, and Jim Simons’ Renaissance Technologies.
As industrywide interest jumped, key money managers have jumped into Mead Johnson Nutrition CO (NYSE:MJN) headfirst. Paulson & Co, managed by John Paulson, established the most valuable position in Mead Johnson Nutrition CO (NYSE:MJN). Paulson & Co had $6.2 million invested in the company at the end of the third quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $6.1 million position during the quarter. The other funds with brand new MJN positions are Anand Parekh’s Alyeska Investment Group, Jeffrey Altman’s Owl Creek Asset Management, and David Harding’s Winton Capital Management.
Let’s check out hedge fund activity in other stocks similar to Mead Johnson Nutrition CO (NYSE:MJN). These stocks are Marriott International Inc (NYSE:MAR), ORIX Corporation (ADR) (NYSE:IX), Stanley Black & Decker, Inc. (NYSE:SWK), and HCP, Inc. (NYSE:HCP). All of these stocks’ market caps match MJN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAR | 48 | 2553585 | 12 |
| IX | 6 | 5672 | 2 |
| SWK | 27 | 766595 | 0 |
| HCP | 14 | 154380 | -2 |
As you can see these stocks had an average of 24 investors with bullish positions and the average amount invested in these stocks was $870 million. That figure was $619 million in MJN’s case. Marriott International Inc (NYSE:MAR) is the most popular stock in this table. On the other hand ORIX Corporation (ADR) (NYSE:IX) is the least popular one with only 6 bullish hedge fund positions. Mead Johnson Nutrition CO (NYSE:MJN) 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 Marriott International Inc (NYSE:MAR) might be a better candidate to consider a long position.
