The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards H&R Block, Inc. (NYSE:HRB).
Is HRB a good stock to buy? H&R Block, Inc. (NYSE:HRB) was in 30 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 44. HRB investors should pay attention to an increase in hedge fund interest lately. There were 27 hedge funds in our database with HRB holdings at the end of March. Our calculations also showed that HRB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Prem Watsa of Fairfax Financial Holdings
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a look at the fresh hedge fund action surrounding H&R Block, Inc. (NYSE:HRB).
Do Hedge Funds Think HRB Is A Good Stock To Buy Now?
At Q2’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the first quarter of 2020. On the other hand, there were a total of 24 hedge funds with a bullish position in HRB a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in H&R Block, Inc. (NYSE:HRB) was held by D E Shaw, which reported holding $36.4 million worth of stock at the end of June. It was followed by AQR Capital Management with a $31.3 million position. Other investors bullish on the company included Arrowstreet Capital, Citadel Investment Group, and Fairfax Financial Holdings. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to H&R Block, Inc. (NYSE:HRB), around 1.99% of its 13F portfolio. Rings Capital Management is also relatively very bullish on the stock, dishing out 1.61 percent of its 13F equity portfolio to HRB.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Renaissance Technologies, assembled the biggest position in H&R Block, Inc. (NYSE:HRB). Renaissance Technologies had $11.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $3.3 million position during the quarter. The following funds were also among the new HRB investors: Michael Gelband’s ExodusPoint Capital, Renee Yao’s Neo Ivy Capital, and Peter A. Wright’s P.A.W. CAPITAL PARTNERS.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as H&R Block, Inc. (NYSE:HRB) but similarly valued. These stocks are Adient plc (NYSE:ADNT), Balchem Corporation (NASDAQ:BCPC), JFrog Ltd. (NASDAQ:FROG), Radian Group Inc (NYSE:RDN), Signet Jewelers Limited (NYSE:SIG), Premier Inc (NASDAQ:PINC), and Quaker Chemical Corp (NYSE:KWR). All of these stocks’ market caps resemble HRB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADNT | 35 | 662444 | -4 |
| BCPC | 15 | 50095 | 1 |
| FROG | 12 | 251080 | -8 |
| RDN | 30 | 358639 | 0 |
| SIG | 33 | 1209048 | 7 |
| PINC | 17 | 147282 | -2 |
| KWR | 15 | 152150 | -3 |
| Average | 22.4 | 404391 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.4 hedge funds with bullish positions and the average amount invested in these stocks was $404 million. That figure was $230 million in HRB’s case. Adient plc (NYSE:ADNT) is the most popular stock in this table. On the other hand JFrog Ltd. (NASDAQ:FROG) is the least popular one with only 12 bullish hedge fund positions. H&R Block, Inc. (NYSE:HRB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HRB is 67.6. 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 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on HRB as the stock returned 6.5% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
