Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved, lost a third of its value since the end of July. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2018 yielded an average return of 6.7% year-to-date, vs. a gain of 2.6% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Home Bancshares Inc (NASDAQ:HOMB).
Home Bancshares Inc (NASDAQ:HOMB) was in 14 hedge funds’ portfolios at the end of September. HOMB shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. There were 12 hedge funds in our database with HOMB holdings at the end of the previous quarter. Our calculations also showed that homb 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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the latest hedge fund action regarding Home Bancshares Inc (NASDAQ:HOMB).
What have hedge funds been doing with Home Bancshares Inc (NASDAQ:HOMB)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in HOMB at the beginning of this year. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Mendon Capital Advisors held the most valuable stake in Home Bancshares Inc (NASDAQ:HOMB), which was worth $9.5 million at the end of the third quarter. On the second spot was Basswood Capital which amassed $5.6 million worth of shares. Moreover, Millennium Management, Two Sigma Advisors, and Skylands Capital were also bullish on Home Bancshares Inc (NASDAQ:HOMB), allocating a large percentage of their portfolios to this stock.
Consequently, key money managers have jumped into Home Bancshares Inc (NASDAQ:HOMB) headfirst. Ancora Advisors, managed by Frederick DiSanto, assembled the most valuable position in Home Bancshares Inc (NASDAQ:HOMB). Ancora Advisors had $0 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks similar to Home Bancshares Inc (NASDAQ:HOMB). These stocks are Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), United States Cellular Corporation (NYSE:USM), LaSalle Hotel Properties (NYSE:LHO), and The New York Times Company (NYSE:NYT). This group of stocks’ market values match HOMB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RARE | 17 | 163418 | 6 |
| USM | 15 | 191634 | 2 |
| LHO | 28 | 744016 | -7 |
| NYT | 34 | 897710 | 6 |
| Average | 23.5 | 499195 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $499 million. That figure was $30 million in HOMB’s case. The New York Times Company (NYSE:NYT) is the most popular stock in this table. On the other hand United States Cellular Corporation (NYSE:USM) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Home Bancshares Inc (NASDAQ:HOMB) is even less popular than USM. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None. This article was originally published at Insider Monkey.
