Should You Consider Adding Mettler-Toledo International Inc. (MTD) to Your Portfolio?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Is Mettler-Toledo International Inc. (NYSE:MTD) the right pick for your portfolio? Hedge funds are in a bullish mood. The number of long hedge fund positions rose by 1 lately. MTD was in 21 hedge funds’ portfolios at the end of September. There were 20 hedge funds in our database with MTD holdings at the end of the previous quarter. At the end of this article we will also compare MTD to other stocks including Total System Services, Inc. (NYSE:TSS), CNH Industrial NV (NYSE:CNHI), and Kansas City Southern (NYSE:KSU) to get a better sense of its popularity.

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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Hedge fund activity in Mettler-Toledo International Inc. (NYSE:MTD)

Heading into the fourth quarter of 2016, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 5% increase from one quarter earlier and the third-straight quarter in which the number of hedge funds with positions has risen. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the largest position in Mettler-Toledo International Inc. (NYSE:MTD), worth close to $370.5 million, amounting to 3.2% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $21.5 million position. Other hedge funds and institutional investors that hold long positions encompass Cliff Asness’ AQR Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP and Phill Gross and Robert Atchinson’s Adage Capital Management.

Consequently, some big names were leading the bulls’ herd. Columbus Circle Investors, managed by Principal Global Investors, assembled the largest position in Mettler-Toledo International Inc. (NYSE:MTD). Columbus Circle Investors had $9.4 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $5.7 million position during the quarter. The other funds with brand new MTD positions are Alec Litowitz and Ross Laser’s Magnetar Capital, Mike Vranos’ Ellington, and Benjamin A. Smith’s Laurion Capital Management.

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 Total System Services, Inc. (NYSE:TSS), CNH Industrial NV (NYSE:CNHI), Kansas City Southern (NYSE:KSU), and Restaurant Brands International Inc (NYSE:QSR). This group of stocks’ market caps are similar to MTD’s market cap.

As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.22 billion. That figure was $485 million in MTD’s case. Kansas City Southern (NYSE:KSU) is the most popular stock in this table. On the other hand CNH Industrial NV (NYSE:CNHI) is the least popular one with only 15 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KSU might be a better candidate to consider for a long position.

Disclosure: None