Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about Hudson Ltd. (NYSE:HUD) in this article.
Is Hudson Ltd. (NYSE:HUD) undervalued? The smart money is in a bearish mood. The number of long hedge fund bets fell by 8 lately. Our calculations also showed that HUD isn’t among the 30 most popular stocks among hedge funds. HUD was in 12 hedge funds’ portfolios at the end of December. There were 20 hedge funds in our database with HUD holdings at the end of the previous quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a peek at the key hedge fund action surrounding Hudson Ltd. (NYSE:HUD).
Hedge fund activity in Hudson Ltd. (NYSE:HUD)
Heading into the first quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -40% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in HUD a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Hudson Ltd. (NYSE:HUD) was held by Junto Capital Management, which reported holding $16.1 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $11.3 million position. Other investors bullish on the company included Marshall Wace LLP, Two Sigma Advisors, and Laurion Capital Management.
Seeing as Hudson Ltd. (NYSE:HUD) has experienced declining sentiment from the smart money, it’s safe to say that there was a specific group of hedge funds that elected to cut their entire stakes in the third quarter. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management sold off the largest position of the 700 funds watched by Insider Monkey, worth an estimated $11.6 million in stock. Steve Cohen’s fund, Point72 Asset Management, also said goodbye to its stock, about $9.9 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 8 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Hudson Ltd. (NYSE:HUD). These stocks are Atara Biotherapeutics Inc (NASDAQ:ATRA), Nexa Resources S.A. (NYSE:NEXA), Axos Financial, Inc. (NYSE:AX), and Acushnet Holdings Corp. (NYSE:GOLF). This group of stocks’ market values resemble HUD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATRA | 11 | 566114 | -1 |
| NEXA | 10 | 18594 | 1 |
| AX | 15 | 65080 | 4 |
| GOLF | 11 | 21058 | -3 |
| Average | 11.75 | 167712 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $168 million. That figure was $54 million in HUD’s case. Axos Financial, Inc. (NYSE:AX) is the most popular stock in this table. On the other hand Nexa Resources S.A. (NYSE:NEXA) is the least popular one with only 10 bullish hedge fund positions. Hudson Ltd. (NYSE:HUD) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately HUD wasn’t nearly as popular as these 15 stock and hedge funds that were betting on HUD were disappointed as the stock returned -9.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.