Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Mueller Industries, Inc. (NYSE:MLI) based on that data and determine whether they were really smart about the stock.
Mueller Industries, Inc. (NYSE:MLI) was in 18 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 21. MLI investors should be aware of an increase in hedge fund interest in recent months. There were 17 hedge funds in our database with MLI positions at the end of the first quarter. Our calculations also showed that MLI isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
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Paul Marshall of Marshall Wace
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Keeping this in mind we’re going to take a look at the latest hedge fund action encompassing Mueller Industries, Inc. (NYSE:MLI).
How have hedgies been trading Mueller Industries, Inc. (NYSE:MLI)?
At Q2’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in MLI a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, GAMCO Investors was the largest shareholder of Mueller Industries, Inc. (NYSE:MLI), with a stake worth $94.4 million reported as of the end of September. Trailing GAMCO Investors was Gates Capital Management, which amassed a stake valued at $44.9 million. Arrowstreet Capital, Royce & Associates, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Gates Capital Management allocated the biggest weight to Mueller Industries, Inc. (NYSE:MLI), around 2.24% of its 13F portfolio. AltraVue Capital is also relatively very bullish on the stock, designating 1.46 percent of its 13F equity portfolio to MLI.
Consequently, key hedge funds were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Mueller Industries, Inc. (NYSE:MLI). Marshall Wace LLP had $0.9 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.3 million position during the quarter. The only other fund with a brand new MLI position is Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks similar to Mueller Industries, Inc. (NYSE:MLI). These stocks are Apollo Commercial Real Est. Finance Inc (NYSE:ARI), Columbia Property Trust Inc (NYSE:CXP), Cubic Corporation (NYSE:CUB), Trupanion Inc (NYSE:TRUP), Global Net Lease, Inc. (NYSE:GNL), Rent-A-Center Inc (NASDAQ:RCII), and First Merchants Corporation (NASDAQ:FRME). All of these stocks’ market caps resemble MLI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARI | 10 | 37315 | -7 |
| CXP | 16 | 54504 | -1 |
| CUB | 13 | 13770 | -4 |
| TRUP | 15 | 205082 | 2 |
| GNL | 7 | 11216 | 0 |
| RCII | 19 | 349982 | 0 |
| FRME | 11 | 63854 | -1 |
| Average | 13 | 105103 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $175 million in MLI’s case. Rent-A-Center Inc (NASDAQ:RCII) is the most popular stock in this table. On the other hand Global Net Lease, Inc. (NYSE:GNL) is the least popular one with only 7 bullish hedge fund positions. Mueller Industries, Inc. (NYSE:MLI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MLI is 77.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately MLI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MLI were disappointed as the stock returned 2.1% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
