Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Bank of Hawaii Corporation (NYSE:BOH).
Is Bank of Hawaii Corporation (NYSE:BOH) a bargain? Money managers seem to be getting more optimistic. The number of bullish hedge fund investments improved by two last quarter. In this way, eight 10 funds in our database held BOH positions at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Avis Budget Group Inc. (NASDAQ:CAR), Integrated Device Technology, Inc. (NASDAQ:IDTI), and NRG Yield, Inc. Class C (NYSE:NYLD) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, let’s check out the latest action encompassing Bank of Hawaii Corporation (NYSE:BOH).
How are hedge funds trading Bank of Hawaii Corporation (NYSE:BOH)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. By comparison, eight hedge funds held shares or bullish call options in BOH heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the number one position in Bank of Hawaii Corporation (NYSE:BOH), worth close to $23.5 million, corresponding to 0.2% of its total 13F portfolio. On Royce & Associates’s heels is Cliff Asness’ AQR Capital Management, with a $9.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that are bullish encompass Jim Simons’ Renaissance Technologies, one of the largest hedge funds in the world, Dmitry Balyasny’s Balyasny Asset Management, and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key hedge funds have jumped into Bank of Hawaii Corporation (NYSE:BOH) headfirst. Folger Hill Asset Management, led by Solomon Kumin, created the most valuable position in Bank of Hawaii Corporation (NYSE:BOH). Folger Hill Asset Management had $0.7 million invested in the company at the end of the quarter. James Dondero’s Highland Capital Management also initiated a $0.4 million position during the quarter. The following funds were also among the new BOH investors: Paul Tudor Jones’s Tudor Investment Corp and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Bank of Hawaii Corporation (NYSE:BOH) but similarly valued. We will take a look at Avis Budget Group Inc. (NASDAQ:CAR), Integrated Device Technology, Inc. (NASDAQ:IDTI), NRG Yield, Inc. Class C (NYSE:NYLD), and Laredo Petroleum Holdings Inc (NYSE:LPI). All of these stocks’ market caps are closest to BOH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAR | 30 | 1080116 | -3 |
| IDTI | 25 | 311391 | -1 |
| NYLD | 25 | 209760 | -4 |
| LPI | 22 | 461028 | 1 |
As you can see these stocks had an average of 26 funds with bullish positions and the average amount invested in these stocks was $516 million. That figure was $50 million in BOH’s case. Avis Budget Group Inc. (NASDAQ:CAR) is the most popular stock in this table. On the other hand Laredo Petroleum Holdings Inc (NYSE:LPI) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Bank of Hawaii Corporation (NYSE:BOH) is even less popular than LPI. 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
