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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Harley-Davidson, Inc. (NYSE:HOG).
Is Harley-Davidson, Inc. (NYSE:HOG) undervalued? Hedge funds are in a pessimistic mood. The number of bullish hedge fund positions were trimmed by 2 in recent months. Our calculations also showed that HOG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). HOG was in 17 hedge funds’ portfolios at the end of March. There were 19 hedge funds in our database with HOG positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Phill Gross of Adage Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to analyze the key hedge fund action regarding Harley-Davidson, Inc. (NYSE:HOG).
How have hedgies been trading Harley-Davidson, Inc. (NYSE:HOG)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HOG over the last 18 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Impala Asset Management held the most valuable stake in Harley-Davidson, Inc. (NYSE:HOG), which was worth $50.2 million at the end of the third quarter. On the second spot was Impala Asset Management which amassed $11 million worth of shares. Millennium Management, GMT Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Impala Asset Management allocated the biggest weight to Harley-Davidson, Inc. (NYSE:HOG), around 6.76% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, earmarking 0.43 percent of its 13F equity portfolio to HOG.
Due to the fact that Harley-Davidson, Inc. (NYSE:HOG) has faced a decline in interest from the smart money, it’s safe to say that there were a few money managers that elected to cut their positions entirely heading into Q4. Interestingly, Joel Greenblatt’s Gotham Asset Management cut the largest stake of the “upper crust” of funds watched by Insider Monkey, comprising about $3.5 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund cut about $1.3 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Harley-Davidson, Inc. (NYSE:HOG) but similarly valued. We will take a look at Carter’s, Inc. (NYSE:CRI), Descartes Systems Group (NASDAQ:DSGX), NeoGenomics, Inc. (NASDAQ:NEO), and Virgin Galactic Holdings, Inc. (NYSE:SPCE). This group of stocks’ market values are similar to HOG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRI | 23 | 149581 | 2 |
| DSGX | 10 | 103626 | -2 |
| NEO | 11 | 51026 | -1 |
| SPCE | 12 | 55139 | -20 |
| Average | 14 | 89843 | -5.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $88 million in HOG’s case. Carter’s, Inc. (NYSE:CRI) is the most popular stock in this table. On the other hand Descartes Systems Group (NASDAQ:DSGX) is the least popular one with only 10 bullish hedge fund positions. Harley-Davidson, Inc. (NYSE:HOG) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on HOG as the stock returned 29.7% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
