Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Hillenbrand, Inc. (NYSE:HI).
Is Hillenbrand, Inc. (NYSE:HI) a safe investment now? The smart money is getting less bullish. The number of long hedge fund bets went down by 2 recently. Our calculations also showed that HI isn’t among the 30 most popular stocks among hedge funds (view video below). HI was in 18 hedge funds’ portfolios at the end of the second quarter of 2019. There were 20 hedge funds in our database with HI positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the new hedge fund action surrounding Hillenbrand, Inc. (NYSE:HI).
How have hedgies been trading Hillenbrand, Inc. (NYSE:HI)?
Heading into the third quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HI over the last 16 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, GLG Partners held the most valuable stake in Hillenbrand, Inc. (NYSE:HI), which was worth $16.6 million at the end of the second quarter. On the second spot was Millennium Management which amassed $10.7 million worth of shares. Moreover, D E Shaw, Citadel Investment Group, and Two Sigma Advisors were also bullish on Hillenbrand, Inc. (NYSE:HI), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Hillenbrand, Inc. (NYSE:HI) has witnessed declining sentiment from the smart money, logic holds that there lies a certain “tier” of hedge funds that decided to sell off their entire stakes in the second quarter. It’s worth mentioning that David Costen Haley’s HBK Investments sold off the largest investment of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $1.4 million in stock. Peter Algert and Kevin Coldiron’s fund, Algert Coldiron Investors, also sold off its stock, about $1 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds in the second quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Hillenbrand, Inc. (NYSE:HI). These stocks are 2U Inc (NASDAQ:TWOU), California Water Service Group (NYSE:CWT), Cohen & Steers, Inc. (NYSE:CNS), and Peabody Energy Corporation (NYSE:BTU). This group of stocks’ market caps are closest to HI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TWOU | 14 | 71032 | -5 |
| CWT | 12 | 32352 | 4 |
| CNS | 15 | 69454 | 6 |
| BTU | 31 | 1270777 | 4 |
| Average | 18 | 360904 | 2.25 |
View table here if you experience formatting issues.
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 $361 million. That figure was $58 million in HI’s case. Peabody Energy Corporation (NYSE:BTU) is the most popular stock in this table. On the other hand California Water Service Group (NYSE:CWT) is the least popular one with only 12 bullish hedge fund positions. Hillenbrand, Inc. (NYSE:HI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HI investors were disappointed as the stock returned -21.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
