Is HD Supply Holdings Inc (HDS) Worthy Of Your Portfolio?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards HD Supply Holdings Inc (NASDAQ:HDS).

So, is HD Supply Holdings Inc (NASDAQ:HDS) a buy, sell, or hold? The best stock pickers are getting less optimistic, as the number of bullish hedge fund bets retreated by seven to 40 during the third quarter. Nevertheless, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives, since 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 KT Corporation (ADR) (NYSE:KT), Raymond James Financial, Inc. (NYSE:RJF), and Kohl’s Corporation (NYSE:KSS) to gather more data points.

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 take a glance at the key action regarding HD Supply Holdings Inc (NASDAQ:HDS).

What have hedge funds been doing with HD Supply Holdings Inc (NASDAQ:HDS)?

A total of 40 funds tracked by Insider Monkey were long HD Supply Holdings, down by 15% from the end of the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Blue Ridge Capital, managed by John Griffin, holds the largest position in HD Supply Holdings Inc (NASDAQ:HDS). Blue Ridge Capital has a $274.1 million position in the stock, comprising 3.2% of its 13F portfolio. The second largest stake is held by Barry Rosenstein’s JANA Partners, with a $266.5 million position; 4.7% of its 13F portfolio is allocated to the company. Some other peers that hold long positions encompass Thomas Steyer’s Farallon Capital, David Cohen and Harold Levy’s Iridian Asset Management, and Phill Gross and Robert Atchinson’s Adage Capital Management.

Seeing as HD Supply Holdings Inc (NASDAQ:HDS) has experienced declining sentiment from the smart money, we can see that there exists a select few funds that decided to sell off their positions entirely in the third quarter. At the top of the heap, Brian Taylor’s Pine River Capital Management said goodbye to the biggest position of all the hedgies watched by Insider Monkey, valued at an estimated $34.8 million in stock, and First Eagle Investment Management was right behind this move, as the fund dumped about $28.1 million worth of shares. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 7 funds in the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as HD Supply Holdings Inc (NASDAQ:HDS) but similarly valued. These stocks are KT Corporation (ADR) (NYSE:KT), Raymond James Financial, Inc. (NYSE:RJF), Kohl’s Corporation (NYSE:KSS), and Oaktree Capital Group LLC (NYSE:OAK). This group of stocks’ market caps match HDS’s market cap.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $241 million, which is significantly lower in comparison with the $1866 million figure in HDS’s case. Kohl’s Corporation (NYSE:KSS) is the most popular stock in this table. On the other hand KT Corporation (ADR) (NYSE:KT) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks HD Supply Holdings Inc (NASDAQ:HDS) 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.