Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Hayward Holdings, Inc. (NYSE:HAYW) changed recently.
Is HAYW a good stock to buy? The best stock pickers were becoming hopeful. The number of long hedge fund positions increased by 25 lately. Hayward Holdings, Inc. (NYSE:HAYW) was in 25 hedge funds’ portfolios at the end of March. Our calculations also showed that HAYW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Phillip Gross of Adage Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to review the new hedge fund action encompassing Hayward Holdings, Inc. (NYSE:HAYW).
Do Hedge Funds Think HAYW Is A Good Stock To Buy Now?
At first quarter’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25 from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in HAYW 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.
According to Insider Monkey’s hedge fund database, Alyeska Investment Group, managed by Anand Parekh, holds the biggest position in Hayward Holdings, Inc. (NYSE:HAYW). Alyeska Investment Group has a $54.6 million position in the stock, comprising 0.7% of its 13F portfolio. Coming in second is Zimmer Partners, led by Stuart J. Zimmer, holding a $29.6 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Phill Gross and Robert Atchinson’s Adage Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Pinz Capital allocated the biggest weight to Hayward Holdings, Inc. (NYSE:HAYW), around 0.75% of its 13F portfolio. Alyeska Investment Group is also relatively very bullish on the stock, designating 0.73 percent of its 13F equity portfolio to HAYW.
As aggregate interest increased, some big names were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, created the biggest position in Hayward Holdings, Inc. (NYSE:HAYW). Alyeska Investment Group had $54.6 million invested in the company at the end of the quarter. Stuart J. Zimmer’s Zimmer Partners also initiated a $29.6 million position during the quarter. The other funds with brand new HAYW positions are Phill Gross and Robert Atchinson’s Adage Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Israel Englander’s Millennium Management.
Let’s now take a look at hedge fund activity in other stocks similar to Hayward Holdings, Inc. (NYSE:HAYW). We will take a look at Envestnet Inc (NYSE:ENV), Tilray, Inc. (NASDAQ:TLRY), Murphy USA Inc. (NYSE:MUSA), SeaWorld Entertainment Inc (NYSE:SEAS), Millicom International Cellular S.A. (NASDAQ:TIGO), Progyny, Inc. (NASDAQ:PGNY), and New Relic Inc (NYSE:NEWR). This group of stocks’ market valuations match HAYW’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENV | 18 | 210832 | -10 |
| TLRY | 21 | 257933 | 4 |
| MUSA | 19 | 264778 | -7 |
| SEAS | 39 | 1881920 | 6 |
| TIGO | 5 | 42136 | -1 |
| PGNY | 26 | 221476 | 2 |
| NEWR | 27 | 1141779 | -3 |
| Average | 22.1 | 574408 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $574 million. That figure was $210 million in HAYW’s case. SeaWorld Entertainment Inc (NYSE:SEAS) is the most popular stock in this table. On the other hand Millicom International Cellular S.A. (NASDAQ:TIGO) is the least popular one with only 5 bullish hedge fund positions. Hayward Holdings, Inc. (NYSE:HAYW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HAYW is 57.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on HAYW as the stock returned 44% since the end of Q1 (through 7/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
