Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Milacron Holdings Corp (NYSE:MCRN).
Milacron Holdings Corp (NYSE:MCRN) was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. MCRN has seen a decrease in hedge fund interest lately. There were 8 hedge funds in our database with MCRN holdings at the end of the second quarter. At the end of this article we will also compare MCRN to other stocks including Kraton Performance Polymers Inc (NYSE:KRA), Interface, Inc. (NASDAQ:TILE), and TPG Specialty Lending Inc (NYSE:TSLX) to get a better sense of its popularity.
Follow Milacron Holdings Corp. (NYSE:MCRN)
Follow Milacron Holdings Corp. (NYSE:MCRN)
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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What have hedge funds been doing with Milacron Holdings Corp (NYSE:MCRN)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a 25% drop from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in MCRN a year earlier, showing a nearly 50% drop in bullish positions in the last year. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Levin Capital Strategies, led by John A. Levin, holds the biggest position in Milacron Holdings Corp (NYSE:MCRN). Levin Capital Strategies has a $52.5 million position in the stock. The second most bullish fund manager is Adage Capital Management, led by Phill Gross and Robert Atchinson, which holds a $16.2 million position. Some other members of the smart money that are bullish consist of Millennium Management, one of the 10 largest hedge funds in the world, David E. Shaw’s D E Shaw, and Glenn Russell Dubin’s Highbridge Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
Since Milacron Holdings Corp (NYSE:MCRN) has experienced a decline in interest from hedge fund managers, logic holds that there is a sect of fund managers who sold off their positions entirely last quarter. It’s worth mentioning that Jim Simons’ Renaissance Technologies cashed in the biggest stake of all the hedgies tracked by Insider Monkey, comprising about $0.2 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dumped about $0.2 million worth of shares itself.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Milacron Holdings Corp (NYSE:MCRN) but similarly valued. We will take a look at Kraton Performance Polymers Inc (NYSE:KRA), Interface, Inc. (NASDAQ:TILE), TPG Specialty Lending Inc (NYSE:TSLX), and The Spectranetics Corporation (NASDAQ:SPNC). This group of stocks’ market values are closest to MCRN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KRA | 25 | 227559 | 1 |
| TILE | 21 | 114656 | 3 |
| TSLX | 6 | 16165 | -2 |
| SPNC | 25 | 160116 | 7 |
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $75 million in MCRN’s case. Kraton Performance Polymers Inc (NYSE:KRA) is the most popular stock in this table. On the other hand TPG Specialty Lending Inc (NYSE:TSLX) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Milacron Holdings Corp (NYSE:MCRN) is only as popular as TSLX. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.
Disclosure: None
