Hedge Funds Are Crazy About Hawaiian Electric Industries, Inc. (HE)

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Hawaiian Electric Industries, Inc. (NYSE:HE) investors should be aware of an increase in hedge fund interest lately. HE was in 13 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with HE 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 Snyder S Lance Inc (NASDAQ:LNCE), Yelp Inc (NYSE:YELP), and The Hanover Insurance Group, Inc. (NYSE:THG) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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How have hedgies been trading Hawaiian Electric Industries, Inc. (NYSE:HE)?

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, up by 18% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in HE 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.

When looking at the institutional investors followed by Insider Monkey, Electron Capital Partners, led by Jos Shaver, holds the most valuable position in Hawaiian Electric Industries, Inc. (NYSE:HE). Electron Capital Partners has a $23.1 million position in the stock, comprising 5.1% of its 13F portfolio. On Electron Capital Partners’s heels is Balyasny Asset Management, led by Dmitry Balyasny, which holds a $18.8 million position. Remaining hedge funds and institutional investors that hold long positions consist of Jim Simons’ Renaissance Technologies, Cliff Asness’ AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that Electron Capital Partners is 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.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Balyasny Asset Management initiated the biggest position in Hawaiian Electric Industries, Inc. (NYSE:HE). Jonathan Barrett and Paul Segal’s Luminus Management also initiated a $9.8 million position during the quarter. The other funds with new positions in the stock are Michael Platt and William Reeves’ BlueCrest Capital Mgmt. and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Hawaiian Electric Industries, Inc. (NYSE:HE) but similarly valued. These stocks are Snyder S Lance Inc (NASDAQ:LNCE), Yelp Inc (NYSE:YELP), The Hanover Insurance Group, Inc. (NYSE:THG), and Catalent Inc (NYSE:CTLT). All of these stocks’ market caps resemble HE’s market cap.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $382 million. That figure was $117 million in HE’s case. Yelp Inc (NYSE:YELP) is the most popular stock in this table. On the other hand Snyder S Lance Inc (NASDAQ:LNCE) is the least popular one with only 8 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 YELP might be a better candidate to consider taking a long position in.

Disclosure: None