Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Harte Hanks Inc (NYSE:HHS) has experienced a decrease in enthusiasm from smart money in recent months. There were 9 hedge funds in our database with HHS positions at the end of the last quarter. At the end of this article we will also compare HHS to other stocks including CARDIOME PHARMA CORP (NASDAQ:CRME), Destination Maternity Corp (NASDAQ:DEST), and Digirad Corporation (NASDAQ:DRAD) to get a better sense of its popularity.
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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How have hedgies been trading Harte Hanks Inc (NYSE:HHS)?
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, down by 31% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HHS over the last 5 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the largest position in Harte Hanks Inc (NYSE:HHS). Renaissance Technologies has a $2 million position in the stock. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates holding a $1.4 million position. Other professional money managers that hold long positions encompass Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that GRT Capital Partners is 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.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that cut their entire stakes in the stock during the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest stake of the 700 funds monitored by Insider Monkey, valued at an estimated $0.5 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund sold off about $0.1 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks similar to Harte Hanks Inc (NYSE:HHS). These stocks are CARDIOME PHARMA CORP (NASDAQ:CRME), Destination Maternity Corp (NASDAQ:DEST), Digirad Corporation (NASDAQ:DRAD), and Hydra Industries Acquisition Corp. (NASDAQ:HDRA). This group of stocks’ market values are similar to HHS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRME | 8 | 24293 | 2 |
| DEST | 7 | 18830 | 1 |
| DRAD | 7 | 16894 | 2 |
| HDRA | 5 | 13605 | 1 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $5 million in HHS’s case. CARDIOME PHARMA CORP (NASDAQ:CRME) is the most popular stock in this table. On the other hand Hydra Industries Acquisition Corp. (NASDAQ:HDRA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Harte Hanks Inc (NYSE:HHS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
