We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Bank of Hawaii Corporation (NYSE:BOH) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Bank of Hawaii Corporation (NYSE:BOH) has seen an increase in hedge fund sentiment lately. BOH was in 16 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 14 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 Q4 rankings and see the video at the end of this article for Q3 rankings).
In the eyes of most investors, hedge funds are perceived as slow, old investment vehicles of the past. While there are more than 8000 funds with their doors open at the moment, We look at the masters of this group, about 850 funds. Most estimates calculate that this group of people command most of all hedge funds’ total asset base, and by monitoring their matchless investments, Insider Monkey has unsheathed a few investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
William Harnisch of Peconic Partners LLC
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to view the latest hedge fund action encompassing Bank of Hawaii Corporation (NYSE:BOH).
What have hedge funds been doing with Bank of Hawaii Corporation (NYSE:BOH)?
Heading into the first quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in BOH over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Bank of Hawaii Corporation (NYSE:BOH), with a stake worth $46.6 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $22.4 million. Citadel Investment Group, Balyasny Asset Management, and Winton Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Signition LP allocated the biggest weight to Bank of Hawaii Corporation (NYSE:BOH), around 1.15% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.2 percent of its 13F equity portfolio to BOH.
Now, specific money managers were leading the bulls’ herd. Bridgewater Associates, managed by Ray Dalio, created the most outsized position in Bank of Hawaii Corporation (NYSE:BOH). Bridgewater Associates had $0.8 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also initiated a $0.3 million position during the quarter. The other funds with brand new BOH positions are George Zweig, Shane Haas and Ravi Chander’s Signition LP and William Harnisch’s Peconic Partners LLC.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Bank of Hawaii Corporation (NYSE:BOH) but similarly valued. We will take a look at Hancock Whitney Corporation (NASDAQ:HWC), UniFirst Corp (NYSE:UNF), Six Flags Entertainment Corp (NYSE:SIX), and The Macerich Company (NYSE:MAC). All of these stocks’ market caps are closest to BOH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HWC | 16 | 70660 | -4 |
| UNF | 21 | 159214 | -3 |
| SIX | 38 | 609215 | -3 |
| MAC | 26 | 222927 | 3 |
| Average | 25.25 | 265504 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $266 million. That figure was $142 million in BOH’s case. Six Flags Entertainment Corp (NYSE:SIX) is the most popular stock in this table. On the other hand Hancock Whitney Corporation (NASDAQ:HWC) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Bank of Hawaii Corporation (NYSE:BOH) is even less popular than HWC. Hedge funds dodged a bullet by taking a bearish stance towards BOH. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but managed to beat the market by 5.5 percentage points. Unfortunately BOH wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BOH investors were disappointed as the stock returned -45.3% during the same time period 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 most of these stocks already outperformed the market so far in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
