Is MTD A Good Stock To Buy According To Hedge Funds?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Mettler-Toledo International Inc. (NYSE:MTD) in this article.

Is MTD a good stock to buy? Hedge funds were becoming hopeful. The number of bullish hedge fund positions rose by 3 lately. Mettler-Toledo International Inc. (NYSE:MTD) was in 30 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 31. Our calculations also showed that MTD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Bruce Kovner of Caxton Associates LP

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s take a look at the fresh hedge fund action regarding Mettler-Toledo International Inc. (NYSE:MTD).

Do Hedge Funds Think MTD Is A Good Stock To Buy Now?

At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MTD over the last 21 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Impax Asset Management, managed by Ian Simm, holds the largest position in Mettler-Toledo International Inc. (NYSE:MTD). Impax Asset Management has a $155.8 million position in the stock, comprising 1.4% of its 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which holds a $126.4 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions include Richard Chilton’s Chilton Investment Company, Greg Poole’s Echo Street Capital Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Chilton Investment Company allocated the biggest weight to Mettler-Toledo International Inc. (NYSE:MTD), around 3.46% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, dishing out 1.36 percent of its 13F equity portfolio to MTD.

Consequently, key hedge funds have been driving this bullishness. Cinctive Capital Management, managed by Richard SchimeláandáLawrence Sapanski, initiated the biggest position in Mettler-Toledo International Inc. (NYSE:MTD). Cinctive Capital Management had $3.1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $2.5 million position during the quarter. The following funds were also among the new MTD investors: Bruce Kovner’s Caxton Associates LP, Qing Li’s Sciencast Management, and Donald Sussman’s Paloma Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Mettler-Toledo International Inc. (NYSE:MTD) but similarly valued. These stocks are Zillow Group Inc (NASDAQ:Z), Lloyds Banking Group PLC (NYSE:LYG), XP Inc. (NASDAQ:XP), Welltower Inc. (NYSE:WELL), Yandex NV (NASDAQ:YNDX), AMETEK, Inc. (NYSE:AME), and Freeport-McMoRan Inc. (NYSE:FCX). This group of stocks’ market valuations match MTD’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.1 hedge funds with bullish positions and the average amount invested in these stocks was $1265 million. That figure was $603 million in MTD’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 5 bullish hedge fund positions. Mettler-Toledo International Inc. (NYSE:MTD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MTD is 56.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on MTD as the stock returned 17.5% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.