Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That’s why we pay special attention to hedge fund activity in these stocks.
Huntington Ingalls Industries Inc (NYSE:HII) shareholders have witnessed an increase in enthusiasm from smart money in recent months. HII was in 31 hedge funds’ portfolios at the end of the first quarter of 2019. There were 27 hedge funds in our database with HII holdings at the end of the previous quarter. Our calculations also showed that HII isn’t among the 30 most popular stocks among hedge funds.
According to most market participants, hedge funds are viewed as slow, old investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, Our researchers look at the elite of this group, about 750 funds. It is estimated that this group of investors command the lion’s share of the hedge fund industry’s total capital, and by tracking their finest picks, Insider Monkey has determined several investment strategies that have historically beaten the market. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We’re going to take a peek at the key hedge fund action regarding Huntington Ingalls Industries Inc (NYSE:HII).
Hedge fund activity in Huntington Ingalls Industries Inc (NYSE:HII)
Heading into the second quarter of 2019, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. On the other hand, there were a total of 27 hedge funds with a bullish position in HII a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Huntington Ingalls Industries Inc (NYSE:HII) was held by AQR Capital Management, which reported holding $385.7 million worth of stock at the end of March. It was followed by Adage Capital Management with a $96.9 million position. Other investors bullish on the company included East Side Capital (RR Partners), Renaissance Technologies, and Two Sigma Advisors.
As industrywide interest jumped, specific money managers have jumped into Huntington Ingalls Industries Inc (NYSE:HII) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Huntington Ingalls Industries Inc (NYSE:HII). Arrowstreet Capital had $5.3 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1.9 million investment in the stock during the quarter. The other funds with brand new HII positions are Benjamin A. Smith’s Laurion Capital Management, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Jeffrey Talpins’s Element Capital Management.
Let’s check out hedge fund activity in other stocks similar to Huntington Ingalls Industries Inc (NYSE:HII). These stocks are OGE Energy Corp. (NYSE:OGE), American Financial Group (NYSE:AFG), Teledyne Technologies Incorporated (NYSE:TDY), and Pearson PLC (NYSE:PSO). This group of stocks’ market caps match HII’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OGE | 17 | 265837 | 1 |
| AFG | 30 | 316813 | 1 |
| TDY | 28 | 596871 | 8 |
| PSO | 4 | 13571 | -1 |
| Average | 19.75 | 298273 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $298 million. That figure was $708 million in HII’s case. American Financial Group (NYSE:AFG) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Huntington Ingalls Industries Inc (NYSE:HII) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on HII, though not to the same extent, as the stock returned -0.7% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
