The Middleby Corporation (NASDAQ:MIDD) was in 15 hedge funds’ portfolio at the end of December. MIDD has experienced an increase in enthusiasm from smart money recently. There were 13 hedge funds in our database with MIDD holdings at the end of the previous quarter.
In the eyes of most traders, hedge funds are assumed to be underperforming, old financial vehicles of years past. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey look at the moguls of this club, close to 450 funds. Most estimates calculate that this group oversees the majority of the smart money’s total capital, and by tracking their top picks, we have spotted a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as important, positive insider trading activity is another way to parse down the marketplace. Obviously, there are many reasons for an insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Several academic studies have demonstrated the impressive potential of this tactic if piggybackers understand where to look (learn more here).
Keeping this in mind, let’s take a peek at the recent action surrounding The Middleby Corporation (NASDAQ:MIDD).
What does the smart money think about The Middleby Corporation (NASDAQ:MIDD)?
In preparation for this year, a total of 15 of the hedge funds we track were long in this stock, a change of 15% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably.
According to our comprehensive database, Pennant Capital Management, managed by Alan Fournier, holds the biggest position in The Middleby Corporation (NASDAQ:MIDD). Pennant Capital Management has a $44 million position in the stock, comprising 0.9% of its 13F portfolio. Sitting at the No. 2 spot is Bares Capital Management, managed by Brian Bares, which held a $22 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include John W. Rogers’s Ariel Investments, Drew Cupps’s Cupps Capital Management and D. E. Shaw’s D E Shaw.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Bryn Mawr Capital, managed by Ken Gray and Steve Walsh, assembled the most valuable position in The Middleby Corporation (NASDAQ:MIDD). Bryn Mawr Capital had 0 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $0 million position during the quarter. The other funds with new positions in the stock are Cliff Asness’s AQR Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
What have insiders been doing with The Middleby Corporation (NASDAQ:MIDD)?
Insider buying is best served when the primary stock in question has experienced transactions within the past six months. Over the latest 180-day time frame, The Middleby Corporation (NASDAQ:MIDD) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to The Middleby Corporation (NASDAQ:MIDD). These stocks are Sauer-Danfoss Inc. (NYSE:SHS), 3D Systems Corporation (NYSE:DDD), ITT Corp (NYSE:ITT), Lennox International Inc. (NYSE:LII), and Crane Co. (NYSE:CR). All of these stocks are in the diversified machinery industry and their market caps match MIDD’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Sauer-Danfoss Inc. (NYSE:SHS) | 17 | 0 | 0 |
| 3D Systems Corporation (NYSE:DDD) | 8 | 1 | 3 |
| ITT Corp (NYSE:ITT) | 18 | 0 | 8 |
| Lennox International Inc. (NYSE:LII) | 15 | 0 | 11 |
| Crane Co. (NYSE:CR) | 19 | 0 | 9 |
With the returns exhibited by the aforementioned time-tested strategies, retail investors should always keep an eye on hedge fund and insider trading activity, and The Middleby Corporation (NASDAQ:MIDD) is an important part of this process.
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