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: Herc Holdings Inc. (NYSE:HRI).
Is Herc Holdings Inc. (NYSE:HRI) an attractive investment today? Herc Holdings is the equipment rental company formerly named Hertz Global Holding, which started trading under the symbol HRI after the company’s car rental business was spun-off at the beginning of July and the stock went through a 1-for-15 reverse stock split. Overall, 28 funds tracked by Insider Monkey held shares of Herc Holdings at the end of September. At the end of this article we will also compare HRI to other stocks including Advanced Accelerator Application SA(ADR) (NASDAQ:AAAP), Gogo Inc (NASDAQ:GOGO), and ClubCorp Holdings Inc (NYSE:MYCC) to get a better sense of its popularity.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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Now, we’re going to take a peek at the recent action encompassing Herc Holdings Inc. (NYSE:HRI).
What does the smart money think about Herc Holdings Inc. (NYSE:HRI)?
As stated earlier, at the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in Herc Holdings. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Carl Icahn’s Icahn Capital LP has the number one position in Herc Holdings Inc. (NYSE:HRI), worth close to $145.3 million, accounting for 0.7% of its total 13F portfolio. Sitting at the No. 2 spot is Mario Gabelli’s GAMCO Investors, with a $83.7 million position; 0.5% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism consist of Jonathon Jacobson’s Highfields Capital Management, Paul Reeder and Edward Shapiro’s PAR Capital Management, and Jeffrey Tannenbaum’s Fir Tree. 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.
The second page of this article, will compare Herc Holdings to other stocks with similar market capitalizations.
Let’s go over hedge fund activity in other stocks similar to Herc Holdings Inc. (NYSE:HRI). These stocks are Advanced Accelerator Application SA(ADR) (NASDAQ:AAAP), Gogo Inc (NASDAQ:GOGO), ClubCorp Holdings Inc (NYSE:MYCC), and AveXis Inc (NASDAQ:AVXS). This group of stocks’ market valuations are similar to HRI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AAAP | 7 | 138309 | 1 |
| GOGO | 21 | 183787 | 5 |
| MYCC | 18 | 102793 | 0 |
| AVXS | 20 | 297586 | 10 |
As you can see these stocks had an average of 17 funds with bullish positions and the average amount invested in these stocks was $181 million. That figure was $470 million in HRI’s case. Gogo Inc (NASDAQ:GOGO) is the most popular stock in this table. On the other hand Advanced Accelerator Application SA(ADR) (NASDAQ:AAAP) is the least popular one with only seven investors holding shares. Compared to these stocks Herc Holdings Inc. (NYSE:HRI) 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
