Mueller Water Products, Inc. (MWA): Hedge Funds Are Snapping Up

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 third 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 6 years and analyze what the smart money thinks of Mueller Water Products, Inc. (NYSE:MWA) based on that data.

Is Mueller Water Products, Inc. (NYSE:MWA) the right investment to pursue these days? Prominent investors were getting more bullish. The number of long hedge fund positions increased by 1 recently. Mueller Water Products, Inc. (NYSE:MWA) was in 23 hedge funds’ portfolios at the end of September. The all time high for this statistic is 25. Our calculations also showed that MWA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 22 hedge funds in our database with MWA holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a look at the new hedge fund action encompassing Mueller Water Products, Inc. (NYSE:MWA).

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

At third quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in MWA a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

The largest stake in Mueller Water Products, Inc. (NYSE:MWA) was held by Impax Asset Management, which reported holding $202.4 million worth of stock at the end of September. It was followed by GAMCO Investors with a $59.1 million position. Other investors bullish on the company included Millennium Management, Arrowstreet Capital, and ExodusPoint Capital. In terms of the portfolio weights assigned to each position Impax Asset Management allocated the biggest weight to Mueller Water Products, Inc. (NYSE:MWA), around 0.83% of its 13F portfolio. Infini Capital is also relatively very bullish on the stock, dishing out 0.72 percent of its 13F equity portfolio to MWA.

Now, key money managers were leading the bulls’ herd. Arosa Capital Management, managed by Till Bechtolsheimer, assembled the most valuable position in Mueller Water Products, Inc. (NYSE:MWA). Arosa Capital Management had $1.5 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) also made a $0.4 million investment in the stock during the quarter. The following funds were also among the new MWA investors: Greg Eisner’s Engineers Gate Manager, Qing Li’s Sciencast Management, and Tony Chin’s Infini Capital.

Let’s go over hedge fund activity in other stocks similar to Mueller Water Products, Inc. (NYSE:MWA). We will take a look at Comstock Resources Inc (NYSE:CRK), Silicon Motion Technology Corp. (NASDAQ:SIMO), Yatsen Holding Limited (NYSE:YSG), Xometry Inc. (NASDAQ:XMTR), Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), South Jersey Industries Inc (NYSE:SJI), and Doma Holdings Inc. (NYSE:DOMA). This group of stocks’ market values are closest to MWA’s market value.

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As you can see these stocks had an average of 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $261 million. That figure was $322 million in MWA’s case. Comstock Resources Inc (NYSE:CRK) is the most popular stock in this table. On the other hand Yatsen Holding Limited (NYSE:YSG) is the least popular one with only 11 bullish hedge fund positions. Mueller Water Products, Inc. (NYSE:MWA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MWA is 79.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately MWA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MWA were disappointed as the stock returned -7.6% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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