Is Middleby Corp (MIDD) A Good Stock To Buy?

The market has been volatile due to elections and the potential of another Federal Reserve rate increase. Small cap stocks have been on a tear, as the Russell 2000 ETF (IWM) has outperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of June. SEC filings and hedge fund investor letters indicate that the smart money seems to be getting back in stocks, and the funds’ movements is one of the reasons why small-cap stocks are red hot. In this article, we analyze what the smart money thinks of Middleby Corp (NASDAQ:MIDD) and find out how it is affected by hedge funds’ moves.

Middleby Corp (NASDAQ:MIDD) was in 26 hedge funds’ portfolios at the end of September. MIDD shareholders have witnessed an increase in hedge fund interest recently. There were 19 hedge funds in our database with MIDD positions at the end of the previous quarter. At the end of this article we will also compare MIDD to other stocks including DDR Corp (NYSE:DDR), EnCana Corporation (USA) (NYSE:ECA), and DexCom, Inc. (NASDAQ:DXCM) to get a better sense of its popularity.

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Keeping this in mind, let’s take a look at the fresh action regarding Middleby Corp (NASDAQ:MIDD).

What does the smart money think about Middleby Corp (NASDAQ:MIDD)?

At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a jump of 37% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, OZ Management, run by Daniel S. Och, holds the largest position in Middleby Corp (NASDAQ:MIDD). According to regulatory filings, the fund has a $109.1 million position in the stock, comprising 0.6% of its 13F portfolio. The second largest stake is held by Columbus Circle Investors which holds a $38.7 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include Israel Englander’s Millennium Management, Matthew A. Weatherbie’s Weatherbie Capital and Greg Poole’s Echo Street Capital Management.

Consequently, key hedge funds were breaking ground themselves. BlueCrest Capital Mgmt., led by Michael Platt and William Reeves, created the biggest position in Middleby Corp (NASDAQ:MIDD). According to its latest 13F filing, the fund had $6.7 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also initiated a $6.7 million position during the quarter. The following funds were also among the new MIDD investors: Ken Heebner’s Capital Growth Management, Matthew Tewksbury’s Stevens Capital Management, and Ken Griffin’s Citadel Investment Group.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Middleby Corp (NASDAQ:MIDD) but similarly valued. These stocks are DDR Corp (NYSE:DDR), EnCana Corporation (USA) (NYSE:ECA), DexCom, Inc. (NASDAQ:DXCM), and New Oriental Education & Tech Grp (ADR) (NYSE:EDU). All of these stocks’ market caps are closest to MIDD’s market cap.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $739 million. That figure was $345 million in MIDD’s case. EnCana Corporation (USA) (NYSE:ECA) is the most popular stock in this table. On the other hand DDR Corp (NYSE:DDR) is the least popular one with only 18 bullish hedge fund positions. Middleby Corp (NASDAQ:MIDD) 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 ECA might be a better candidate to consider a long position.

Disclosure: none.