Is HOG Stock A Buy or Sell?

In this article we will take a look at whether hedge funds think Harley-Davidson, Inc. (NYSE:HOG) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is HOG stock a buy? Harley-Davidson, Inc. (NYSE:HOG) was in 35 hedge funds’ portfolios at the end of December. The all time high for this statistic is 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. HOG investors should pay attention to an increase in hedge fund interest lately. There were 32 hedge funds in our database with HOG holdings at the end of September. Our calculations also showed that HOG isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 124 percentage points since March 2017 (see the details here).

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to take a peek at the recent hedge fund action regarding Harley-Davidson, Inc. (NYSE:HOG).

Do Hedge Funds Think HOG Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in HOG a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, H Partners Management was the largest shareholder of Harley-Davidson, Inc. (NYSE:HOG), with a stake worth $237.8 million reported as of the end of December. Trailing H Partners Management was Impala Asset Management, which amassed a stake valued at $116.5 million. Brahman Capital, Arrowstreet Capital, and Holocene Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position H Partners Management allocated the biggest weight to Harley-Davidson, Inc. (NYSE:HOG), around 28.91% of its 13F portfolio. Impala Asset Management is also relatively very bullish on the stock, setting aside 10.5 percent of its 13F equity portfolio to HOG.

As aggregate interest increased, key money managers were leading the bulls’ herd. Thunderbird Partners, managed by David Fear, initiated the biggest position in Harley-Davidson, Inc. (NYSE:HOG). Thunderbird Partners had $27.4 million invested in the company at the end of the quarter. Brad Farber’s Atika Capital also initiated a $9.2 million position during the quarter. The following funds were also among the new HOG investors: Richard Schimel and Lawrence Sapanski’s Cinctive Capital Management, Peter Avellone’s Cartenna Capital, and J. Carlo Cannell’s Cannell Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Harley-Davidson, Inc. (NYSE:HOG) but similarly valued. These stocks are Vontier Corporation (NYSE:VNT), First Citizens BancShares Inc. (NASDAQ:FCNCA), Silicon Laboratories Inc. (NASDAQ:SLAB), Tempur Sealy International Inc. (NYSE:TPX), Virgin Galactic Holdings, Inc. (NYSE:SPCE), Gildan Activewear Inc (NYSE:GIL), and MultiPlan Corporation (NYSE:MPLN). This group of stocks’ market valuations are similar to HOG’s market valuation.

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As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $498 million. That figure was $693 million in HOG’s case. Tempur Sealy International Inc. (NYSE:TPX) is the most popular stock in this table. On the other hand Gildan Activewear Inc (NYSE:GIL) is the least popular one with only 17 bullish hedge fund positions. Harley-Davidson, Inc. (NYSE:HOG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOG is 72.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on HOG as the stock returned 9.3% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.