It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Heritage Financial Corporation (NASDAQ:HFWA).
Heritage Financial Corporation (NASDAQ:HFWA) shareholders have witnessed a decrease in support from the world’s most successful money managers lately. There were 13 hedge funds in our database with HFWA holdings at the end of the previous quarter. At the end of this article we will also compare HFWA to other stocks including Flexion Therapeutics Inc (NASDAQ:FLXN), Alon USA Partners LP (NYSE:ALDW), and Motorcar Parts of America, Inc. (NASDAQ:MPAA) 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.
Kevin George/Shutterstock.com
Now, we’re going to take a look at the fresh action encompassing Heritage Financial Corporation (NASDAQ:HFWA).
How have hedgies been trading Heritage Financial Corporation (NASDAQ:HFWA)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, down 8% from the second quarter of 2016. By comparison, 9 hedge funds held shares or bullish call options in HFWA heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mark Lee’s Forest Hill Capital has the largest position in Heritage Financial Corporation (NASDAQ:HFWA), worth close to $7.9 million, accounting for 3.9% of its total 13F portfolio. The second largest stake is held by Paul Hondros of AlphaOne Capital Partners which manages a $3.7 million position; 1.2% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions comprise Renaissance Technologies, which is one of the largest hedge funds in the world, Amy Minella’s Cardinal Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Seeing as Heritage Financial Corporation (NASDAQ:HFWA) has experienced a decline in interest from hedge fund managers, we can see that there is a sect of hedge funds that slashed their entire stakes last quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management cut the largest position of all the hedgies monitored by Insider Monkey, comprising close to $0.6 million in stock, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital was right behind this move, as the fund dumped about $7,000 worth of shares.
Let’s go over hedge fund activity in other stocks similar to Heritage Financial Corporation (NASDAQ:HFWA). These stocks are Flexion Therapeutics Inc (NASDAQ:FLXN), Alon USA Partners LP (NYSE:ALDW), Motorcar Parts of America, Inc. (NASDAQ:MPAA), and Sabine Royalty Trust (NYSE:SBR). This group of stocks’ market values are similar to HFWA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FLXN | 8 | 40444 | -3 |
| ALDW | 4 | 3706 | 4 |
| MPAA | 10 | 63869 | -5 |
| SBR | 7 | 13332 | 0 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $24 million in HFWA’s case. Motorcar Parts of America, Inc. (NASDAQ:MPAA) is the most popular stock in this table. On the other hand Alon USA Partners LP (NYSE:ALDW) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Heritage Financial Corporation (NASDAQ:HFWA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
