How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM).
Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM) was in an 8 hedge funds’ portfolios at the end of the third quarter of 2015. Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM) has seen an increase in hedge fund sentiment in recent months. There were 7 hedge funds in our database with Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM) 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 Steel Excel Inc (NASDAQ:SXCL), W&T Offshore, Inc. (NYSE:WTI), and Magnachip Semiconductor Corp (NYSE:MX) to gather more data points.
Follow Hawaiian Telcom Holdco Inc. (NASDAQ:HCOM)
Follow Hawaiian Telcom Holdco Inc. (NASDAQ:HCOM)
In today’s marketplace, there are several signals that stock traders employ to value stocks. A couple of the most useful signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the top money managers can outperform the S&P 500 by a healthy amount (see the details here).
With all of this in mind, let’s take a look at the latest action surrounding Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM).
How are hedge funds trading Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM)?
Heading into Q4, a total of an 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 14% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Pine River Capital Management, managed by Brian Taylor, holds the number one position in Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM). Pine River Capital Management has a $7.9 million position in the stock, comprising 0.1% of its 13F portfolio. On Pine River Capital Management’s heels is Wynnefield Capital, led by Nelson Obus, holding a $7.5 million position; 3% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions contain Renaissance Technologies, Willem Mesdag’s Red Mountain Capital, and D E Shaw.
Consequently, key money managers were breaking ground themselves. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, established the most outsized position in Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM). Algert Coldiron Investors had $0.3 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks similar to Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM). These stocks are Steel Excel Inc (NASDAQ:SXCL), W&T Offshore, Inc. (NYSE:WTI), Magnachip Semiconductor Corp (NYSE:MX), and Xactly Corp (NYSE:XTLY). All of these stocks’ market caps match Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SXCL | 4 | 152736 | 3 |
| WTI | 8 | 20485 | -7 |
| MX | 21 | 130318 | 2 |
| XTLY | 4 | 10923 | -6 |
As you can see, these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $79 million, versus $26 million in Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM)’s case. Magnachip Semiconductor Corp (NYSE:MX) is the most popular stock in this table. On the other hand, Steel Excel Inc (NASDAQ:SXCL) is the least popular one with only 4 bullish hedge fund positions. Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM) 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, Magnachip Semiconductor Corp (NYSE:MX) might be a better candidate to consider a long position.
