We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 835 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Manhattan Associates, Inc. (NASDAQ:MANH).
Manhattan Associates, Inc. (NASDAQ:MANH) investors should be aware of a decrease in hedge fund sentiment in recent months. MANH was in 24 hedge funds’ portfolios at the end of December. There were 25 hedge funds in our database with MANH holdings at the end of the previous quarter. Our calculations also showed that MANH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
If you’d ask most investors, hedge funds are seen as slow, old financial vehicles of the past. While there are greater than 8000 funds with their doors open today, Our experts choose to focus on the upper echelon of this club, around 850 funds. Most estimates calculate that this group of people have their hands on the majority of the smart money’s total asset base, and by watching their inimitable investments, Insider Monkey has determined a number of investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Chuck Royce of Royce & Associates
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a peek at the key hedge fund action encompassing Manhattan Associates, Inc. (NASDAQ:MANH).
What have hedge funds been doing with Manhattan Associates, Inc. (NASDAQ:MANH)?
At Q4’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the third quarter of 2019. By comparison, 20 hedge funds held shares or bullish call options in MANH a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, RGM Capital, managed by Robert G. Moses, holds the number one position in Manhattan Associates, Inc. (NASDAQ:MANH). RGM Capital has a $93.8 million position in the stock, comprising 5.4% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $76.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other peers that hold long positions encompass Cliff Asness’s AQR Capital Management, Renaissance Technologies and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position RGM Capital allocated the biggest weight to Manhattan Associates, Inc. (NASDAQ:MANH), around 5.36% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.45 percent of its 13F equity portfolio to MANH.
Judging by the fact that Manhattan Associates, Inc. (NASDAQ:MANH) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few fund managers who sold off their entire stakes heading into Q4. Intriguingly, Matthew Hulsizer’s PEAK6 Capital Management said goodbye to the largest investment of all the hedgies watched by Insider Monkey, totaling about $2.9 million in stock, and Guy Shahar’s DSAM Partners was right behind this move, as the fund cut about $2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Manhattan Associates, Inc. (NASDAQ:MANH). We will take a look at World Wrestling Entertainment, Inc. (NYSE:WWE), Eastgroup Properties Inc (NYSE:EGP), Tech Data Corp (NASDAQ:TECD), and Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC). This group of stocks’ market caps match MANH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WWE | 30 | 599403 | -7 |
| EGP | 10 | 64618 | -2 |
| TECD | 34 | 645025 | 11 |
| TKC | 7 | 49348 | 1 |
| Average | 20.25 | 339599 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $340 million. That figure was $455 million in MANH’s case. Tech Data Corp (NASDAQ:TECD) is the most popular stock in this table. On the other hand Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) is the least popular one with only 7 bullish hedge fund positions. Manhattan Associates, Inc. (NASDAQ:MANH) 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. 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 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately MANH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MANH were disappointed as the stock returned -37.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
