Is H&E Equipment Services, Inc. (NASDAQ:HEES) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is H&E Equipment Services, Inc. (NASDAQ:HEES) a buy, sell, or hold? Investors who are in the know are becoming less hopeful. The number of long hedge fund bets went down by 1 lately. Our calculations also showed that HEES 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 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 fresh hedge fund action encompassing H&E Equipment Services, Inc. (NASDAQ:HEES).
Hedge fund activity in H&E Equipment Services, Inc. (NASDAQ:HEES)
At the end of the second quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the first quarter of 2019. By comparison, 13 hedge funds held shares or bullish call options in HEES a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, SG Capital Management, managed by Ken Grossman and Glen Schneider, holds the number one position in H&E Equipment Services, Inc. (NASDAQ:HEES). SG Capital Management has a $12.6 million position in the stock, comprising 2% of its 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding a $7.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish comprise Phill Gross and Robert Atchinson’s Adage Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Due to the fact that H&E Equipment Services, Inc. (NASDAQ:HEES) has faced a decline in interest from hedge fund managers, logic holds that there was a specific group of hedgies who sold off their positions entirely last quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group sold off the biggest investment of the “upper crust” of funds monitored by Insider Monkey, totaling close to $0.9 million in stock. Andrew Feldstein and Stephen Siderow’s fund, Blue Mountain Capital, also dumped its stock, about $0.8 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to H&E Equipment Services, Inc. (NASDAQ:HEES). We will take a look at Oil States International, Inc. (NYSE:OIS), Revlon Inc (NYSE:REV), Target Hospitality Corp. (NASDAQ:TH), and Universal Insurance Holdings, Inc. (NYSEAMEX:UVE). This group of stocks’ market caps resemble HEES’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OIS | 9 | 35062 | -5 |
| REV | 31 | 307405 | 3 |
| TH | 17 | 88582 | 0 |
| UVE | 14 | 59222 | 1 |
| Average | 17.75 | 122568 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $38 million in HEES’s case. Revlon Inc (NYSE:REV) is the most popular stock in this table. On the other hand Oil States International, Inc. (NYSE:OIS) is the least popular one with only 9 bullish hedge fund positions. H&E Equipment Services, Inc. (NASDAQ:HEES) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 HEES wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HEES investors were disappointed as the stock returned 0.4% 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 so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
