Hedge Funds Have Never Been This Bullish On Harley-Davidson, Inc. (HOG)

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Harley-Davidson, Inc. (NYSE:HOG) to find out whether there were any major changes in hedge funds’ views.

Is Harley-Davidson, Inc. (NYSE:HOG) the right investment to pursue these days? Hedge funds were turning bullish. The number of long hedge fund positions advanced by 9 recently. Harley-Davidson, Inc. (NYSE:HOG) was in 37 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 35. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that HOG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the eyes of most traders, hedge funds are viewed as underperforming, old financial tools of the past. While there are more than 8000 funds with their doors open at the moment, We choose to focus on the bigwigs of this group, approximately 850 funds. It is estimated that this group of investors administer bulk of all hedge funds’ total asset base, and by following their unrivaled picks, Insider Monkey has discovered many investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

David E. Shaw of D.E. Shaw

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s view the fresh hedge fund action surrounding Harley-Davidson, Inc. (NYSE:HOG).

Do Hedge Funds Think HOG Is A Good Stock To Buy Now?

At Q2’s end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 32% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in HOG a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Rehan Jaffer’s H Partners Management has the most valuable position in Harley-Davidson, Inc. (NYSE:HOG), worth close to $384.9 million, accounting for 33.4% of its total 13F portfolio. The second most bullish fund manager is D E Shaw, managed by D. E. Shaw, which holds a $156.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include Robert Bishop’s Impala Asset Management, Mitch Kuflik and Rob Sobel’s Brahman Capital and David Fear’s Thunderbird Partners. In terms of the portfolio weights assigned to each position H Partners Management allocated the biggest weight to Harley-Davidson, Inc. (NYSE:HOG), around 33.37% of its 13F portfolio. Impala Asset Management is also relatively very bullish on the stock, earmarking 9.64 percent of its 13F equity portfolio to HOG.

Consequently, some big names have jumped into Harley-Davidson, Inc. (NYSE:HOG) headfirst. Renaissance Technologies, assembled the biggest position in Harley-Davidson, Inc. (NYSE:HOG). Renaissance Technologies had $41.2 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also initiated a $38.9 million position during the quarter. The other funds with brand new HOG positions are Peter Avellone’s Cartenna Capital, Peter Avellone’s Cartenna Capital, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to Harley-Davidson, Inc. (NYSE:HOG). We will take a look at Mattel, Inc. (NASDAQ:MAT), First Financial Bankshares Inc (NASDAQ:FFIN), Cabot Oil & Gas Corporation (NYSE:COG), Envista Holdings Corporation (NYSE:NVST), Pacific Biosciences of California, Inc. (NASDAQ:PACB), BanColombia S.A. (NYSE:CIB), and BlackBerry Limited (NYSE:BB). All of these stocks’ market caps match HOG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $697 million. That figure was $1122 million in HOG’s case. Envista Holdings Corporation (NYSE:NVST) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 3 bullish hedge fund positions. Harley-Davidson, Inc. (NYSE:HOG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOG is 88.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately HOG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HOG were disappointed as the stock returned -19% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.