The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded HEICO Corporation (NYSE:HEI) based on those filings.
Is HEICO Corporation (NYSE:HEI) ready to rally soon? Hedge funds were becoming hopeful. The number of bullish hedge fund bets rose by 1 recently. HEICO Corporation (NYSE:HEI) was in 45 hedge funds’ portfolios at the end of March. The all time high for this statistic is 57. Our calculations also showed that HEI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 we’re going to take a look at the recent hedge fund action surrounding HEICO Corporation (NYSE:HEI).
Do Hedge Funds Think HEI Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 45 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HEI over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Bo Shan’s Gobi Capital has the most valuable position in HEICO Corporation (NYSE:HEI), worth close to $105.2 million, accounting for 7.1% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Fisher of Fisher Asset Management, with a $96.8 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Francois Rochon’s Giverny Capital, Renaissance Technologies and Kevin Kuebler and Ming Lam’s Silver Heights Capital Management. In terms of the portfolio weights assigned to each position Silver Heights Capital Management allocated the biggest weight to HEICO Corporation (NYSE:HEI), around 16.56% of its 13F portfolio. Gobi Capital is also relatively very bullish on the stock, earmarking 7.11 percent of its 13F equity portfolio to HEI.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Tudor Investment Corp, managed by Paul Tudor Jones, assembled the most outsized position in HEICO Corporation (NYSE:HEI). Tudor Investment Corp had $6.2 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $2 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Jinghua Yan’s TwinBeech Capital, and Simon Sadler’s Segantii Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as HEICO Corporation (NYSE:HEI) but similarly valued. These stocks are Omnicom Group Inc. (NYSE:OMC), IDEX Corporation (NYSE:IEX), Pembina Pipeline Corp (NYSE:PBA), Boston Properties, Inc. (NYSE:BXP), Brookfield Infrastructure Partners L.P. (NYSE:BIP), Wix.Com Ltd (NASDAQ:WIX), and Markel Corporation (NYSE:MKL). All of these stocks’ market caps resemble HEI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OMC | 33 | 470825 | -1 |
| IEX | 19 | 843312 | -10 |
| PBA | 15 | 74858 | 2 |
| BXP | 27 | 1058389 | -3 |
| BIP | 12 | 47729 | -2 |
| WIX | 40 | 1461252 | 3 |
| MKL | 30 | 654208 | -6 |
| Average | 25.1 | 658653 | -2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $659 million. That figure was $638 million in HEI’s case. Wix.Com Ltd (NASDAQ:WIX) is the most popular stock in this table. On the other hand Brookfield Infrastructure Partners L.P. (NYSE:BIP) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks HEICO Corporation (NYSE:HEI) is more popular among hedge funds. Our overall hedge fund sentiment score for HEI is 79.7. 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. 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 17.4% in 2021 through June 18th and still managed to beat the market by 6.1 percentage points. Hedge funds were also right about betting on HEI, though not to the same extent, as the stock returned 9.6% since the end of March (through June 18th) and outperformed the market as well.
Follow Heico Corp (NYSE:HEI, HEI.A)
Follow Heico Corp (NYSE:HEI, HEI.A)
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Disclosure: None. This article was originally published at Insider Monkey.
