We are still in an overall bull market and many stocks that smart money investors were piling into 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. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Hingham Institution for Savings (NASDAQ:HIFS).
Hedge fund interest in Hingham Institution for Savings (NASDAQ:HIFS) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare HIFS to other stocks including Teekay Corporation (NYSE:TK), Zix Corporation (NASDAQ:ZIXI), and Summit Midstream Partners LP (NYSE:SMLP) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Richard Driehaus of Driehaus Capital
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to take a glance at the recent hedge fund action encompassing Hingham Institution for Savings (NASDAQ:HIFS).
What have hedge funds been doing with Hingham Institution for Savings (NASDAQ:HIFS)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in HIFS over the last 17 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Hingham Institution for Savings (NASDAQ:HIFS) was held by Renaissance Technologies, which reported holding $5.2 million worth of stock at the end of September. It was followed by Driehaus Capital with a $0.9 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and Winton Capital Management. In terms of the portfolio weights assigned to each position Driehaus Capital allocated the biggest weight to Hingham Institution for Savings (NASDAQ:HIFS), around 0.03% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0044 percent of its 13F equity portfolio to HIFS.
Because Hingham Institution for Savings (NASDAQ:HIFS) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of money managers that slashed their positions entirely heading into Q4. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace cut the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $0.3 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also cut its stock, about $0 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Hingham Institution for Savings (NASDAQ:HIFS) but similarly valued. We will take a look at Teekay Corporation (NYSE:TK), Zix Corporation (NASDAQ:ZIXI), Summit Midstream Partners LP (NYSE:SMLP), and Sprague Resources LP (NYSE:SRLP). All of these stocks’ market caps are closest to HIFS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TK | 8 | 22795 | -5 |
| ZIXI | 19 | 67786 | 5 |
| SMLP | 1 | 78 | -3 |
| SRLP | 1 | 1076 | -1 |
| Average | 7.25 | 22934 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $7 million in HIFS’s case. Zix Corporation (NASDAQ:ZIXI) is the most popular stock in this table. On the other hand Summit Midstream Partners LP (NYSE:SMLP) is the least popular one with only 1 bullish hedge fund positions. Hingham Institution for Savings (NASDAQ:HIFS) 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 HIFS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HIFS investors were disappointed as the stock returned 1.7% 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.
