Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.6% in 2019 (through the end of November) and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Bank of Hawaii Corporation (NYSE:BOH) shareholders have witnessed an increase in hedge fund sentiment lately. BOH was in 13 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with BOH holdings at the end of the previous quarter. Our calculations also showed that BOH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most traders, hedge funds are seen as underperforming, old financial tools of years past. While there are greater than 8000 funds trading at present, Our researchers choose to focus on the leaders of this group, about 750 funds. These money managers control most of the smart money’s total asset base, and by tracking their unrivaled investments, Insider Monkey has spotted various investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Dmitry Balyasny of Balyasny Asset Managemnet
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s check out the latest hedge fund action surrounding Bank of Hawaii Corporation (NYSE:BOH).
How are hedge funds trading Bank of Hawaii Corporation (NYSE:BOH)?
Heading into the fourth quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BOH over the last 17 quarters. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies holds the largest position in Bank of Hawaii Corporation (NYSE:BOH). Renaissance Technologies has a $41 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is Royce & Associates, led by Chuck Royce, holding a $20.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish contain Dmitry Balyasny’s Balyasny Asset Management, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Bank of Hawaii Corporation (NYSE:BOH), around 0.19% of its 13F portfolio. Balyasny Asset Management is also relatively very bullish on the stock, setting aside 0.08 percent of its 13F equity portfolio to BOH.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Winton Capital Management, managed by David Harding, established the most outsized position in Bank of Hawaii Corporation (NYSE:BOH). Winton Capital Management had $0.5 million invested in the company at the end of the quarter.
Let’s check out hedge fund activity in other stocks similar to Bank of Hawaii Corporation (NYSE:BOH). These stocks are MorphoSys AG (NASDAQ:MOR), KBR, Inc. (NYSE:KBR), Cosan Limited (NYSE:CZZ), and Tandem Diabetes Care Inc (NASDAQ:TNDM). All of these stocks’ market caps resemble BOH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOR | 4 | 6546 | -2 |
| KBR | 29 | 540631 | 7 |
| CZZ | 15 | 198653 | 0 |
| TNDM | 34 | 587351 | 1 |
| Average | 20.5 | 333295 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $333 million. That figure was $105 million in BOH’s case. Tandem Diabetes Care Inc (NASDAQ:TNDM) is the most popular stock in this table. On the other hand MorphoSys AG (NASDAQ:MOR) is the least popular one with only 4 bullish hedge fund positions. Bank of Hawaii Corporation (NYSE:BOH) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BOH wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BOH investors were disappointed as the stock returned 5.6% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
