In this article we are going to use hedge fund sentiment as a tool and determine whether Hooker Furnishings Corporation (NASDAQ:HOFT) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Hooker Furnishings Corporation (NASDAQ:HOFT) ready to rally soon? The best stock pickers were buying. The number of long hedge fund bets moved up by 4 in recent months. Hooker Furnishings Corporation (NASDAQ:HOFT) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 12. Our calculations also showed that HOFT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 6 hedge funds in our database with HOFT holdings at the end of March.
To most market participants, hedge funds are assumed to be unimportant, outdated financial tools of yesteryear. While there are more than 8000 funds with their doors open today, We hone in on the crème de la crème of this club, around 850 funds. It is estimated that this group of investors control the lion’s share of the hedge fund industry’s total asset base, and by paying attention to their highest performing picks, Insider Monkey has found a few investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .
Richard S. Pzena of Pzena Investment Management
Now we’re going to take a peek at the latest hedge fund action regarding Hooker Furnishings Corporation (NASDAQ:HOFT).
Do Hedge Funds Think HOFT Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the first quarter of 2020. By comparison, 8 hedge funds held shares or bullish call options in HOFT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Royce & Associates was the largest shareholder of Hooker Furnishings Corporation (NASDAQ:HOFT), with a stake worth $46 million reported as of the end of June. Trailing Royce & Associates was Pzena Investment Management, which amassed a stake valued at $45.3 million. Arrowstreet Capital, AQR Capital Management, and Millennium Management 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 Zebra Capital Management allocated the biggest weight to Hooker Furnishings Corporation (NASDAQ:HOFT), around 0.44% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.32 percent of its 13F equity portfolio to HOFT.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most valuable position in Hooker Furnishings Corporation (NASDAQ:HOFT). Millennium Management had $0.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.6 million position during the quarter. The other funds with brand new HOFT positions are Ken Griffin’s Citadel Investment Group and Michael Gelband’s ExodusPoint Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Hooker Furnishings Corporation (NASDAQ:HOFT). These stocks are CytomX Therapeutics, Inc. (NASDAQ:CTMX), Flexion Therapeutics Inc (NASDAQ:FLXN), Guaranty Bancshares, Inc. (NASDAQ:GNTY), Mayville Engineering Company, Inc. (NYSE:MEC), National CineMedia, Inc. (NASDAQ:NCMI), Legacy Housing Corporation (NASDAQ:LEGH), and Forian Inc. (NASDAQ:FORA). This group of stocks’ market valuations are similar to HOFT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTMX | 17 | 116971 | 2 |
| FLXN | 15 | 66940 | -1 |
| GNTY | 6 | 4304 | 5 |
| MEC | 4 | 8975 | 1 |
| NCMI | 13 | 21080 | 2 |
| LEGH | 7 | 23124 | 0 |
| FORA | 1 | 292 | -1 |
| Average | 9 | 34527 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $100 million in HOFT’s case. CytomX Therapeutics, Inc. (NASDAQ:CTMX) is the most popular stock in this table. On the other hand Forian Inc. (NASDAQ:FORA) is the least popular one with only 1 bullish hedge fund positions. Hooker Furnishings Corporation (NASDAQ:HOFT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOFT is 62.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately HOFT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HOFT were disappointed as the stock returned -19.2% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Hooker Furnishings Corp (NASDAQ:HOFT)
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Disclosure: None. This article was originally published at Insider Monkey.
