Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Haemonetics Corporation (NYSE:HAE).
Haemonetics Corporation (NYSE:HAE) has seen a decrease in enthusiasm from smart money recently. HAE was in 16 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with HAE positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Commercial Metals Company (NYSE:CMC), KLX Inc (NASDAQ:KLXI), and Mueller Industries, Inc. (NYSE:MLI) to gather more data points.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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What have hedge funds been doing with Haemonetics Corporation (NYSE:HAE)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 6% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in HAE at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, has the number one position in Haemonetics Corporation (NYSE:HAE), worth close to $32 million. The second largest stake is held by Steve Cohen of Point72 Asset Management, with a $24.8 million position. Other hedge funds and institutional investors that are bullish consist of Peter Schliemann’s Rutabaga Capital Management, Seth Rosen’s Nitorum Capital and Ken Fisher’s Fisher Asset Management. We should note that Nitorum Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Judging by the fact that Haemonetics Corporation (NYSE:HAE) has faced falling interest from hedge fund managers, we can see that there was a specific group of hedgies that slashed their entire stakes by the end of the third quarter. It’s worth mentioning that Joel Greenblatt’s Gotham Asset Management cut the largest position of all the investors tracked by Insider Monkey, comprising about $1.1 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also cut its stock, about $0.8 million worth.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Haemonetics Corporation (NYSE:HAE) but similarly valued. These stocks are Commercial Metals Company (NYSE:CMC), KLX Inc (NASDAQ:KLXI), Mueller Industries, Inc. (NYSE:MLI), and Ebix Inc (NASDAQ:EBIX). This group of stocks’ market valuations resemble HAE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CMC | 16 | 146335 | -2 |
| KLXI | 22 | 422767 | -1 |
| MLI | 15 | 249669 | -1 |
| EBIX | 18 | 163317 | 4 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $246 million. That figure was $113 million in HAE’s case. KLX Inc (NASDAQ:KLXI) is the most popular stock in this table. On the other hand Mueller Industries, Inc. (NYSE:MLI) is the least popular one with only 15 bullish hedge fund positions. Haemonetics Corporation (NYSE:HAE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KLXI might be a better candidate to consider taking a long position in.
Disclosure: None
