Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we pay special attention to the hedge fund activity in the small-cap space.
Haemonetics Corporation (NYSE:HAE) has seen an increase in enthusiasm from smart money in recent months. Our calculations also showed that hae isn’t among the 30 most popular stocks among hedge funds.
To the average investor there are tons of tools investors can use to evaluate publicly traded companies. Some of the less utilized tools are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can beat their index-focused peers by a very impressive margin (see the details here).
Let’s take a gander at the key hedge fund action regarding Haemonetics Corporation (NYSE:HAE).
How are hedge funds trading Haemonetics Corporation (NYSE:HAE)?
Heading into the second quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in HAE a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Haemonetics Corporation (NYSE:HAE), with a stake worth $207.8 million reported as of the end of March. Trailing Renaissance Technologies was Healthcor Management LP, which amassed a stake valued at $118.7 million. AQR Capital Management, Point72 Asset Management, and Nitorum Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key money managers have been driving this bullishness. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, established the most valuable position in Haemonetics Corporation (NYSE:HAE). Healthcor Management LP had $118.7 million invested in the company at the end of the quarter. Ricky Sandler’s Eminence Capital also made a $9.7 million investment in the stock during the quarter. The other funds with brand new HAE positions are Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Haemonetics Corporation (NYSE:HAE) but similarly valued. These stocks are Texas Roadhouse Inc (NASDAQ:TXRH), Black Hills Corporation (NYSE:BKH), CarGurus, Inc. (NASDAQ:CARG), and Hawaiian Electric Industries, Inc. (NYSE:HE). All of these stocks’ market caps match HAE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TXRH | 25 | 267058 | 6 |
| BKH | 18 | 136002 | 1 |
| CARG | 24 | 819877 | 5 |
| HE | 12 | 144367 | -1 |
| Average | 19.75 | 341826 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $342 million. That figure was $648 million in HAE’s case. Texas Roadhouse Inc (NASDAQ:TXRH) is the most popular stock in this table. On the other hand Hawaiian Electric Industries, Inc. (NYSE:HE) is the least popular one with only 12 bullish hedge fund positions. Haemonetics Corporation (NYSE:HAE) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on HAE as the stock returned 12.1% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
