Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 20% in 2019 (through September 30th). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of 24% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Bank of Hawaii Corporation (NYSE:BOH).
Bank of Hawaii Corporation (NYSE:BOH) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of June. At the end of this article we will also compare BOH to other stocks including White Mountains Insurance Group Ltd (NYSE:WTM), Global Blood Therapeutics Inc (NASDAQ:GBT), and Tegna Inc (NYSE:TGNA) to get a better sense of its popularity. Our calculations also showed that BOH isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a large number of indicators investors use to grade their stock investments. Two of the less utilized indicators are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the top money managers can trounce the broader indices by a very impressive margin (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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 analyze the new hedge fund action encompassing Bank of Hawaii Corporation (NYSE:BOH).
What does smart money think about Bank of Hawaii Corporation (NYSE:BOH)?
Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in BOH a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Bank of Hawaii Corporation (NYSE:BOH), which was worth $38.2 million at the end of the second quarter. On the second spot was Royce & Associates which amassed $20.8 million worth of shares. Moreover, Citadel Investment Group, AQR Capital Management, and Two Sigma Advisors were also bullish on Bank of Hawaii Corporation (NYSE:BOH), allocating a large percentage of their portfolios to this stock.
Because Bank of Hawaii Corporation (NYSE:BOH) has faced a decline in interest from the smart money, it’s easy to see that there is a sect of fund managers that decided to sell off their positions entirely by the end of the second quarter. Interestingly, Steve Cohen’s Point72 Asset Management cut the largest investment of the “upper crust” of funds tracked by Insider Monkey, worth about $1.5 million in stock, and Gregg Moskowitz’s Interval Partners was right behind this move, as the fund dumped about $1.2 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over 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 White Mountains Insurance Group Ltd (NYSE:WTM), Global Blood Therapeutics Inc (NASDAQ:GBT), Tegna Inc (NYSE:TGNA), and Paramount Group Inc (NYSE:PGRE). This group of stocks’ market caps match BOH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WTM | 17 | 180077 | 1 |
| GBT | 30 | 583828 | 4 |
| TGNA | 15 | 443926 | -11 |
| PGRE | 13 | 256557 | -3 |
| Average | 18.75 | 366097 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $87 million in BOH’s case. Global Blood Therapeutics Inc (NASDAQ:GBT) is the most popular stock in this table. On the other hand Paramount Group Inc (NYSE:PGRE) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Bank of Hawaii Corporation (NYSE:BOH) is even less popular than PGRE. 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. A small number of hedge funds were also right about betting on BOH, though not to the same extent, as the stock returned 4.5% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
