Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 20 stock picks easily bested the broader market, at 37.4% compared to 27.5%, despite there being a few duds in there like Berkshire Hathaway (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Hawaiian Holdings, Inc. (NASDAQ:HA) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of the third quarter of 2019. 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 Kornit Digital Ltd. (NASDAQ:KRNT), Arbor Realty Trust, Inc. (NYSE:ABR), and Meta Financial Group Inc. (NASDAQ:CASH) to gather more data points. Our calculations also showed that HA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most stock holders, hedge funds are seen as unimportant, old investment vehicles of years past. While there are greater than 8000 funds with their doors open at the moment, Our experts choose to focus on the leaders of this group, about 750 funds. These investment experts handle most of the hedge fund industry’s total asset base, and by shadowing their unrivaled investments, Insider Monkey has brought to light numerous investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Martin Whitman of Third Avenue Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the key hedge fund action regarding Hawaiian Holdings, Inc. (NASDAQ:HA).
Hedge fund activity in Hawaiian Holdings, Inc. (NASDAQ:HA)
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. On the other hand, there were a total of 14 hedge funds with a bullish position in HA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Hawaiian Holdings, Inc. (NASDAQ:HA) was held by Third Avenue Management, which reported holding $37.2 million worth of stock at the end of September. It was followed by Royce & Associates with a $28 million position. Other investors bullish on the company included D E Shaw, Citadel Investment Group, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Hawaiian Holdings, Inc. (NASDAQ:HA), around 3.35% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.26 percent of its 13F equity portfolio to HA.
Since Hawaiian Holdings, Inc. (NASDAQ:HA) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there exists a select few money managers that decided to sell off their full holdings in the third quarter. Intriguingly, David Keidan’s Buckingham Capital Management sold off the biggest investment of the 750 funds monitored by Insider Monkey, valued at close to $17.6 million in stock, and Javier Velazquez’s Albar Capital was right behind this move, as the fund sold off about $1.2 million worth. These transactions are interesting, 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 Hawaiian Holdings, Inc. (NASDAQ:HA). We will take a look at Kornit Digital Ltd. (NASDAQ:KRNT), Arbor Realty Trust, Inc. (NYSE:ABR), Meta Financial Group Inc. (NASDAQ:CASH), and Designer Brands Inc. (NYSE:DBI). All of these stocks’ market caps are similar to HA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KRNT | 12 | 53869 | -1 |
| ABR | 12 | 99896 | -2 |
| CASH | 14 | 127610 | 2 |
| DBI | 19 | 115186 | 3 |
| Average | 14.25 | 99140 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $82 million in HA’s case. Designer Brands Inc. (NYSE:DBI) is the most popular stock in this table. On the other hand Kornit Digital Ltd. (NASDAQ:KRNT) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Hawaiian Holdings, Inc. (NASDAQ:HA) is even less popular than KRNT. Hedge funds clearly dropped the ball on HA as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on HA as the stock returned 15.8% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
