Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is HEICO Corporation (NYSE:HEI), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
HEICO Corporation (NYSE:HEI) investors should pay attention to an increase in hedge fund interest lately. Our calculations also showed that HEI isn’t among the 30 most popular stocks among hedge funds (see the video below).
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to go over the new hedge fund action encompassing HEICO Corporation (NYSE:HEI).
What does smart money think about HEICO Corporation (NYSE:HEI)?
At Q2’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in HEI a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in HEICO Corporation (NYSE:HEI), which was worth $210.9 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $173.3 million worth of shares. Moreover, Royce & Associates, Select Equity Group, and Chilton Investment Company were also bullish on HEICO Corporation (NYSE:HEI), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key hedge funds were breaking ground themselves. Chilton Investment Company, managed by Richard Chilton, created the most valuable position in HEICO Corporation (NYSE:HEI). Chilton Investment Company had $74.4 million invested in the company at the end of the quarter. Greg Poole’s Echo Street Capital Management also initiated a $17.7 million position during the quarter. The other funds with new positions in the stock are Michael Hintze’s CQS Cayman LP, Ken Griffin’s Citadel Investment Group, and Noam Gottesman’s GLG Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as HEICO Corporation (NYSE:HEI) but similarly valued. We will take a look at Church & Dwight Co., Inc. (NYSE:CHD), Check Point Software Technologies Ltd. (NASDAQ:CHKP), Kellogg Company (NYSE:K), and Shinhan Financial Group Co., Ltd. (NYSE:SHG). This group of stocks’ market caps are similar to HEI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHD | 30 | 338517 | 6 |
| CHKP | 24 | 666653 | 0 |
| K | 28 | 528857 | 2 |
| SHG | 5 | 7950 | 1 |
| Average | 21.75 | 385494 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $385 million. That figure was $1100 million in HEI’s case. Church & Dwight Co., Inc. (NYSE:CHD) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks HEICO Corporation (NYSE:HEI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HEI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on HEI were disappointed as the stock returned -6.7% during the third 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 many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
