Hawaiian Holdings, Inc. (HA): Are Hedge Funds Right About This Stock?

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Hawaiian Holdings, Inc. (NASDAQ:HA) was in 22 hedge funds’ portfolios at the end of the third quarter of 2015. HA investors should be aware of a decrease in activity from the world’s largest hedge funds lately. There were 24 hedge funds in our database with HA holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as DigitalGlobe Inc (NYSE:DGI), IPC The Hospitalist Company Inc (NASDAQ:IPCM), and Moelis & Co (NYSE:MC) to gather more data points.

In the financial world there are tons of methods market participants employ to value stocks. A couple of the less known methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top money managers can beat the S&P 500 by a solid margin (see the details here).

Keeping this in mind, let’s check out the new action surrounding Hawaiian Holdings, Inc. (NASDAQ:HA).

How are hedge funds trading Hawaiian Holdings, Inc. (NASDAQ:HA)?

Heading into Q4, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Hirzel Capital Management, managed by Zac Hirzel, holds the largest position in Hawaiian Holdings, Inc. (NASDAQ:HA). Hirzel Capital Management has a $57.1 million position in the stock, comprising 8.1% of its 13F portfolio. The second largest stake is held by Water Street Capital, managed by Gilchrist Berg, which holds a $37.4 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other peers with similar optimism encompass Joel Greenblatt’s Gotham Asset Management, Jim Simons’ Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors.

Judging by the fact that Hawaiian Holdings, Inc. (NASDAQ:HA) has experienced declining sentiment from the smart money, it’s safe to say that there lies a certain “tier” of money managers who sold off their positions entirely in the third quarter. At the top of the heap, Richard Driehaus’ Driehaus Capital dropped the largest position of all the hedgies followed by Insider Monkey, valued at an estimated $3 million in stock, and George Soros’ Soros Fund Management was right behind this move, as the fund dumped about $2.5 million worth of shares. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to Hawaiian Holdings, Inc. (NASDAQ:HA). These stocks are DigitalGlobe Inc (NYSE:DGI), IPC The Hospitalist Company Inc (NASDAQ:IPCM), Moelis & Co (NYSE:MC), and Oil States International, Inc. (NYSE:OIS). This group of stocks’ market valuations are closest to HA’s market valuation.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $140 million, which is lower than the $186 million figure in HA’s case. DigitalGlobe Inc (NYSE:DGI) and Oil States International, Inc. (NYSE:OIS) are the most popular stocks with a total of 18 funds reporting long positions in them, while Moelis & Co (NYSE:MC) is the least popular one. Compared to these stocks Hawaiian Holdings, Inc. (NASDAQ:HA) 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.