At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 28. In this article, we will use that wealth of knowledge to determine whether or not Hanmi Financial Corp (NASDAQ:HAFC) makes for a good investment right now.
Hanmi Financial Corp (NASDAQ:HAFC) shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. HAFC was in 8 hedge funds’ portfolios at the end of June. There were 12 hedge funds in our database with HAFC holdings at the end of the previous quarter. Our calculations also showed that HAFC isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are viewed as slow, outdated financial tools of the past. While there are greater than 8000 funds with their doors open at the moment, Our experts look at the masters of this club, about 750 funds. These investment experts watch over bulk of the hedge fund industry’s total asset base, and by keeping track of their first-class picks, Insider Monkey has determined several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s view the new hedge fund action surrounding Hanmi Financial Corp (NASDAQ:HAFC).
How have hedgies been trading Hanmi Financial Corp (NASDAQ:HAFC)?
At Q2’s end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the first quarter of 2019. By comparison, 13 hedge funds held shares or bullish call options in HAFC a year ago. So, let’s see 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, Renaissance Technologies, holds the largest position in Hanmi Financial Corp (NASDAQ:HAFC). Renaissance Technologies has a $19.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $3.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism include Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.
Seeing as Hanmi Financial Corp (NASDAQ:HAFC) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there exists a select few fund managers that elected to cut their positions entirely by the end of the second quarter. At the top of the heap, Noam Gottesman’s GLG Partners cut the biggest position of the 750 funds watched by Insider Monkey, valued at close to $2.3 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dropped its stock, about $0.5 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 4 funds by the end of the second quarter.
Let’s now review hedge fund activity in other stocks similar to Hanmi Financial Corp (NASDAQ:HAFC). These stocks are Gladstone Commercial Corporation (NASDAQ:GOOD), Cardlytics, Inc. (NASDAQ:CDLX), Morphic Holding, Inc. (NASDAQ:MORF), and Regis Corporation (NYSE:RGS). This group of stocks’ market valuations resemble HAFC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GOOD | 5 | 69741 | -1 |
| CDLX | 10 | 102679 | 1 |
| MORF | 6 | 62838 | 6 |
| RGS | 14 | 245467 | -1 |
| Average | 8.75 | 120181 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $120 million. That figure was $35 million in HAFC’s case. Regis Corporation (NYSE:RGS) is the most popular stock in this table. On the other hand Gladstone Commercial Corporation (NASDAQ:GOOD) is the least popular one with only 5 bullish hedge fund positions. Hanmi Financial Corp (NASDAQ:HAFC) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HAFC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HAFC investors were disappointed as the stock returned -14.6% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
