Were These Hedge Funds Wrong About Piling Into Manpowergroup Inc (MAN)?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Manpowergroup Inc (NYSE:MAN) changed recently.

Manpowergroup Inc (NYSE:MAN) has experienced an increase in hedge fund interest in recent months. Manpowergroup Inc (NYSE:MAN) was in 34 hedge funds’ portfolios at the end of June. The all time high for this statistics is 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MAN 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.

To the average investor there are tons of gauges stock traders employ to grade stocks. A duo of the less known gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outclass the market by a solid amount (see the details here).

Michael Gelband of ExodusPoint Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Last week, most investors overlooked a major development because of the presidential elections: Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. 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. With all of this in mind let’s take a peek at the recent hedge fund action surrounding Manpowergroup Inc (NYSE:MAN).

How have hedgies been trading Manpowergroup Inc (NYSE:MAN)?

Heading into the third quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 48% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MAN over the last 20 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Manpowergroup Inc (NYSE:MAN). AQR Capital Management has a $160.2 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $43.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Renaissance Technologies and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Neo Ivy Capital allocated the biggest weight to Manpowergroup Inc (NYSE:MAN), around 0.44% of its 13F portfolio. Arjuna Capital is also relatively very bullish on the stock, setting aside 0.33 percent of its 13F equity portfolio to MAN.

Consequently, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in Manpowergroup Inc (NYSE:MAN). Balyasny Asset Management had $24.1 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $4.2 million investment in the stock during the quarter. The other funds with brand new MAN positions are Michael Gelband’s ExodusPoint Capital, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Qing Li’s Sciencast Management.

Let’s now take a look at hedge fund activity in other stocks similar to Manpowergroup Inc (NYSE:MAN). We will take a look at Integra Lifesciences Holdings Corp (NASDAQ:IART), Darling Ingredients Inc. (NYSE:DAR), BOK Financial Corporation (NASDAQ:BOKF), Wyndham Hotels & Resorts, Inc. (NYSE:WH), Huntsman Corporation (NYSE:HUN), Qurate Retail, Inc. (NASDAQ:QRTEA), and BridgeBio Pharma, Inc. (NASDAQ:BBIO). This group of stocks’ market valuations match MAN’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.1 hedge funds with bullish positions and the average amount invested in these stocks was $558 million. That figure was $377 million in MAN’s case. Qurate Retail, Inc. (NASDAQ:QRTEA) is the most popular stock in this table. On the other hand BridgeBio Pharma, Inc. (NASDAQ:BBIO) is the least popular one with only 14 bullish hedge fund positions. Manpowergroup Inc (NYSE:MAN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MAN is 74.5. 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 23% in 2020 through October 30th and beat the market again by 20.1 percentage points. Unfortunately MAN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MAN were disappointed as the stock returned -1.3% since the end of June (through 10/30) 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.

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