Should I Avoid Hasbro, Inc. (HAS)?

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Hasbro, Inc. (NASDAQ:HAS) makes for a good investment right now.

Hasbro, Inc. (NASDAQ:HAS) has experienced a decrease in enthusiasm from smart money in recent months. Hasbro, Inc. (NASDAQ:HAS) was in 27 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 36. Our calculations also showed that HAS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Donald Sussman of Paloma Partners

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. With all of this in mind let’s take a glance at the new hedge fund action regarding Hasbro, Inc. (NASDAQ:HAS).

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

At the end of June, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in HAS a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

More specifically, Scopus Asset Management was the largest shareholder of Hasbro, Inc. (NASDAQ:HAS), with a stake worth $42.5 million reported as of the end of June. Trailing Scopus Asset Management was Renaissance Technologies, which amassed a stake valued at $35.6 million. Arrowstreet Capital, Millennium Management, and AQR Capital 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 Prentice Capital Management allocated the biggest weight to Hasbro, Inc. (NASDAQ:HAS), around 2.58% of its 13F portfolio. Scopus Asset Management is also relatively very bullish on the stock, dishing out 0.55 percent of its 13F equity portfolio to HAS.

Seeing as Hasbro, Inc. (NASDAQ:HAS) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of funds who sold off their full holdings in the second quarter. Interestingly, Anand Parekh’s Alyeska Investment Group cut the biggest stake of the 750 funds tracked by Insider Monkey, comprising an estimated $23 million in stock, and Jordan Moelis and Jeff Farroni’s Deep Field Asset Management was right behind this move, as the fund dropped about $6.6 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds in the second quarter.

Let’s now review hedge fund activity in other stocks similar to Hasbro, Inc. (NASDAQ:HAS). We will take a look at Camden Property Trust (NYSE:CPT), Athene Holding Ltd. (NYSE:ATH), Tenaris S.A. (NYSE:TS), Packaging Corporation Of America (NYSE:PKG), Graco Inc. (NYSE:GGG), DaVita Inc (NYSE:DVA), and Interpublic Group of Companies Inc (NYSE:IPG). This group of stocks’ market values are closest to HAS’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1262 million. That figure was $212 million in HAS’s case. Athene Holding Ltd. (NYSE:ATH) is the most popular stock in this table. On the other hand Tenaris S.A. (NYSE:TS) is the least popular one with only 14 bullish hedge fund positions. Hasbro, Inc. (NASDAQ:HAS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HAS is 45.9. 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 negative signal and 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 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately HAS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); HAS investors were disappointed as the stock returned -1.5% since the end of June (through 10/15) 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 most of these stocks already outperformed the market in 2021.

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

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