Is The Howard Hughes Corporation (NYSE:HHC) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
The Howard Hughes Corporation (NYSE:HHC) investors should be aware of an increase in hedge fund interest in recent months. HHC was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 19 hedge funds in our database with HHC positions at the end of the previous quarter. Our calculations also showed that HHC isn’t among the 30 most popular stocks among hedge funds.
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 gander at the recent hedge fund action encompassing The Howard Hughes Corporation (NYSE:HHC).
How are hedge funds trading The Howard Hughes Corporation (NYSE:HHC)?
At Q4’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 37% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HHC over the last 14 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Horizon Asset Management was the largest shareholder of The Howard Hughes Corporation (NYSE:HHC), with a stake worth $184.1 million reported as of the end of September. Trailing Horizon Asset Management was Pershing Square, which amassed a stake valued at $120.4 million. Cardinal Capital, Locust Wood Capital Advisers, and AEW Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, some big names have been driving this bullishness. Laurion Capital Management, managed by Benjamin A. Smith, created the most valuable position in The Howard Hughes Corporation (NYSE:HHC). Laurion Capital Management had $16.3 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $16.1 million investment in the stock during the quarter. The other funds with brand new HHC positions are Richard Mashaal’s Rima Senvest Management, Ken Griffin’s Citadel Investment Group, and Ken Grossman and Glen Schneider’s SG Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Howard Hughes Corporation (NYSE:HHC) but similarly valued. These stocks are Primerica, Inc. (NYSE:PRI), Green Dot Corporation (NYSE:GDOT), Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI), and Cinemark Holdings, Inc. (NYSE:CNK). This group of stocks’ market caps resemble HHC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRI | 16 | 271268 | 4 |
| GDOT | 19 | 266170 | -1 |
| OLLI | 24 | 199733 | 7 |
| CNK | 17 | 166359 | -2 |
| Average | 19 | 225883 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $226 million. That figure was $476 million in HHC’s case. Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) is the most popular stock in this table. On the other hand Primerica, Inc. (NYSE:PRI) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks The Howard Hughes Corporation (NYSE:HHC) is more popular among hedge funds. 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 HHC wasn’t nearly as popular as these 15 stock and hedge funds that were betting on HHC were disappointed as the stock returned 10.5% 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.
