Interest Rate Hike not Enough to Interest Smart Money in Bank of Hawaii Corporation (BOH)

Is Bank of Hawaii Corporation (NYSE:BOH) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2-and-20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs on their payrolls. Like everyone else, hedge funds perform poorly at times, but their consensus picks have historically outperformed the market after risk adjustments.

Bank of Hawaii Corporation (NYSE:BOH) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged during a quarter in which shares declined by about 5%. The stock was in 7 hedge funds’ portfolios at the end of the third quarter of 2015, and the value of their holdings declined by a nearly equal amount to the share price reduction, so there was nearly no movement in the overall amount of BOH shares held by investors in our database. At the end of this article we will also compare BOH to other stocks including Chimera Investment Corporation (NYSE:CIM), Choice Hotels International, Inc. (NYSE:CHH), and SouFun Holdings Limited (ADR) (NYSE:SFUN) to get a better sense of its popularity.

To most stock holders, hedge funds are viewed as worthless, old financial tools of yesteryear. While there are more than an 8,000 funds with their doors open at present, our researchers look at the masters of this club, approximately 700 funds. It is estimated that this group of investors control most of all hedge funds’ total capital, and by tailing their unrivaled investments, Insider Monkey has unearthed a number of investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, we’re going to analyze the latest action encompassing Bank of Hawaii Corporation (NYSE:BOH).

What does the smart money think about Bank of Hawaii Corporation (NYSE:BOH)?

Heading into Q4, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or had already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the largest position in Bank of Hawaii Corporation (NYSE:BOH), worth close to $20.6 million, amounting to 0.1% of its total 13F portfolio. Sitting in the 2 spot is Cliff Asness’ AQR Capital Management, with a $5.9 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish comprise D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Renaissance Technologies.

Due to the fact that Bank of Hawaii Corporation (NYSE:BOH) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few fund managers that slashed their full holdings by the end of the third quarter. Interestingly, Jacob Gottlieb’s Visium Asset Management dumped the biggest stake of the 700 funds watched by Insider Monkey, totaling about $3.3 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund said goodbye to about $2.2 million worth of shares. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Bank of Hawaii Corporation (NYSE:BOH). These stocks are Chimera Investment Corporation (NYSE:CIM), Choice Hotels International, Inc. (NYSE:CHH), SouFun Holdings Limited (ADR) (NYSE:SFUN), and Home Bancshares Inc (NASDAQ:HOMB). This group of stocks’ market caps match BOH’s market cap.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $34 million in BOH’s case. SouFun Holdings Limited (ADR) (NYSE:SFUN) is the most popular stock in this table. On the other hand Choice Hotels International, Inc. (NYSE:CHH) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Bank of Hawaii Corporation (NYSE:BOH) is even less popular than CHH. 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.