Between June 25 and October 30th the Russell 2000 ETF (IWM) has lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worry over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller cap stocks than the normal investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of HollyFrontier Corp (NYSE:HFC) and see how the stock is affected by the recent hedge fund activity.
anekoho/Shutterstock.com
Is HollyFrontier Corp (NYSE:HFC) a bargain? Money managers are becoming more confident. The number of bullish hedge fund bets went up by 14 in recent months.
To most traders, hedge funds are viewed as unimportant, outdated investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, Hedge fund experts at Insider Monkey choose to focus on the masters of this group, around 700 funds. These investment expertscontrol bulk of the smart money’s total capital, and by tailing their top investments, Insider Monkey has unsheathed several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in their back tests.
Keeping this in mind, we’re going to take a peek at the fresh action regarding HollyFrontier Corp (NYSE:HFC).
How are hedge funds trading HollyFrontier Corp (NYSE:HFC)?
At the end of the third quarter, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 54% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes substantially.
When looking at the hedgies followed by Insider Monkey, Israel Englander’s Millennium Management had the most valuable position in HollyFrontier Corp (NYSE:HFC), worth close to $264 million, amounting to 0.5% of its total 13F portfolio. The second most bullish hedge fund manager is Citadel Investment Group, managed by Ken Griffin, which held a $99.6 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Cliff Asness’s AQR Capital Management, and D. E. Shaw’s D E Shaw.
Consequently, key money managers have been driving this bullishness. OZ Management, managed by Daniel S. Och, created the most valuable call position in HollyFrontier Corp (NYSE:HFC). OZ Management had 77 million invested in the company at the end of the quarter. Doug Silverman and Alexander Klabin’s Senator Investment Group also initiated a $61.1 million position during the quarter. The other funds with brand new HFC positions are Jorge Paulo Lemann’s 3G Capital, Phill Gross and Robert Atchinson’s Adage Capital Management, and Robert Pitts’s Steadfast Capital Management.
Let’s also examine hedge fund activity in other stocks similar to HollyFrontier Corp (NYSE:HFC). These stocks are Pentair, Ltd. Registered Share (NYSE:PNR), Ultrapar Participacoes SA (ADR) (NYSE:UGP), Microchip Technology Inc. (NASDAQ:MCHP), and Delhaize Group (ADR) (NYSE:DEG). This group of stocks’ market values are similar to HFC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PNR | 23 | 1080944 | 4 |
| UGP | 6 | 83924 | 0 |
| MCHP | 24 | 151662 | 7 |
| DEG | 5 | 36780 | -4 |
With the returns shown by our tactics, everyday investors should always monitor hedge fund sentiment, and HollyFrontier Corp (NYSE:HFC) is an important part of this process.
