Is HTBI A Good Stock To Buy Now?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Hometrust Bancshares Inc (NASDAQ:HTBI).

Is HTBI a good stock to buy now? Hometrust Bancshares Inc (NASDAQ:HTBI) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 12. HTBI has experienced a decrease in support from the world’s most elite money managers recently. There were 12 hedge funds in our database with HTBI positions at the end of the second quarter. Our calculations also showed that HTBI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a lot of tools stock market investors employ to value stocks. A pair of the most under-the-radar tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a healthy margin (see the details here).

Chuck Royce of Royce & Associates

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Now let’s take a look at the latest hedge fund action encompassing Hometrust Bancshares Inc (NASDAQ:HTBI).

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

Heading into the fourth quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in HTBI over the last 21 quarters. 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, Impax Asset Management was the largest shareholder of Hometrust Bancshares Inc (NASDAQ:HTBI), with a stake worth $14.1 million reported as of the end of September. Trailing Impax Asset Management was Renaissance Technologies, which amassed a stake valued at $10.4 million. Private Capital Management, Royce & Associates, and D E Shaw 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 Fourthstone LLC allocated the biggest weight to Hometrust Bancshares Inc (NASDAQ:HTBI), around 1.14% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, earmarking 0.69 percent of its 13F equity portfolio to HTBI.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified HTBI as a viable investment and initiated a position in the stock.

Let’s also examine hedge fund activity in other stocks similar to Hometrust Bancshares Inc (NASDAQ:HTBI). We will take a look at Gladstone Capital Corporation (NASDAQ:GLAD), Alta Equipment Group Inc. (NYSE:ALTG), Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA), CyberOptics Corporation (NASDAQ:CYBE), Pioneer Bancorp, Inc. (NASDAQ:PBFS), The First Bancorp, Inc. (NASDAQ:FNLC), and Landmark Infrastructure Partners LP (NASDAQ:LMRK). This group of stocks’ market caps resemble HTBI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $38 million in HTBI’s case. Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA) is the most popular stock in this table. On the other hand The First Bancorp, Inc. (NASDAQ:FNLC) is the least popular one with only 1 bullish hedge fund positions. Hometrust Bancshares Inc (NASDAQ:HTBI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HTBI is 57.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on HTBI as the stock returned 39.8% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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