Hedge Funds Are Betting On Hawaiian Electric Industries, Inc. (HE)

Is Hawaiian Electric Industries, Inc. (NYSE:HE) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes, but historically their consensus stock picks outperformed the market after adjusting for known risk factors.

Around a year ago, NextEra Energy and Hawaiian Electric Industries entered into a merger agreement. The deal valued at $4.3 billion is still in progress amid facing several hurdles from authorities. The stock is 16% in red year-to-date, but, amid some positive news in recent months, money managers are becoming more confident. The number of bullish hedge fund positions has gone up by 4 in recent months. At the end of this article we will also compare HE to other stocks, including Inovalon Holdings Inc (NASDAQ:INOV), Royal Gold, Inc USA) (NASDAQ:RGLD), and WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX) to get a better sense of its popularity.

In the eyes of most stock holders, hedge funds are assumed to be underperforming, outdated investment vehicles of years past. While there are greater than 8000 funds in operation today, Our experts hone in on the leaders of this club, about 700 funds. These money managers administer bulk of the hedge fund industry’s total capital, and by watching their top stock picks, Insider Monkey has brought to light a few investment strategies that have historically outstripped the broader indices. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Keeping this in mind, let’s take a look at the key action encompassing Hawaiian Electric Industries, Inc. (NYSE:HE).

What have hedge funds been doing with Hawaiian Electric Industries, Inc. (NYSE:HE)?

At the Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 67% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Jim Simons’ Renaissance Technologies has the biggest position in Hawaiian Electric Industries, Inc. (NYSE:HE), worth close to $23.3 million, amounting to 0.1% of its total 13F portfolio. The second largest stake is held by Electron Capital Partners, led by Jos Shaver, holding a $6.3 million position; 3.6% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism contain John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management, and Mario Gabelli’s GAMCO Investors.

Now, key money managers were breaking ground themselves. Electron Capital Partners initiated the most outsized position in Hawaiian Electric Industries, Inc. (NYSE:HE). Millennium Management also initiated a $3.2 million position during the quarter. The other funds with brand new HE positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Tudor Jones’ Tudor Investment Corp, and Ken Griffin’s Citadel Investment Group.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Hawaiian Electric Industries, Inc. (NYSE:HE) but similarly valued. We will take a look at Inovalon Holdings Inc (NASDAQ:INOV), Royal Gold, Inc USA) (NASDAQ:RGLD), WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX), and MPLX LP (NYSE:MPLX). All of these stocks’ market caps are similar to HE’s market cap.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $219 million. That figure was just $45 million in HE’s case. Royal Gold, Inc USA) (NASDAQ:RGLD) is the most popular stock in this table. On the other hand Inovalon Holdings Inc (NASDAQ:INOV) is the least popular one with only 6 bullish hedge fund positions. Hawaiian Electric Industries, Inc. (NYSE:HE) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RGLD might be a better candidate to consider a long position.