Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
HomeStreet Inc (NASDAQ:HMST) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of September. 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 Sapiens International Corporation N.V. (NASDAQ:SPNS), Silver Bay Realty Trust Corp (NYSE:SBY), and Univest Corp. of PA (NASDAQ:UVSP) to gather more data points.
Follow Homestreet Inc. (NASDAQ:HMST)
Follow Homestreet Inc. (NASDAQ:HMST)
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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Now, let’s take a look at the new action regarding HomeStreet Inc (NASDAQ:HMST).
Hedge fund activity in HomeStreet Inc (NASDAQ:HMST)
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the second quarter of 2016. By comparison, 6 hedge funds held shares or bullish call options in HMST heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Millennium Management, one of the 10 largest hedge funds in the world has the most valuable position in HomeStreet Inc (NASDAQ:HMST), worth close to $3.6 million, comprising less than 0.1% of its total 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, which manages a $2.8 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism consist of Ken Fisher’s Fisher Asset Management, Cliff Asness’s AQR Capital Management and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are 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.
Since HomeStreet Inc (NASDAQ:HMST) has witnessed no change in sentiment from the entirety of the hedge funds we track, we check if there are funds that decided to sell off their full holdings by the end of the third quarter. It’s worth mentioning that Anton Schutz’s Mendon Capital Advisors cut the largest stake of all the investors tracked by Insider Monkey, totaling close to $0.4 million in stock, and Joseph A. Jolson’s Harvest Capital Strategies was right behind this move, as the fund sold off about $0.4 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as HomeStreet Inc (NASDAQ:HMST) but similarly valued. These stocks are Sapiens International Corporation N.V. (NASDAQ:SPNS), Silver Bay Realty Trust Corp (NYSE:SBY), Univest Corp. of PA (NASDAQ:UVSP), and Double Eagle Acqusition Corp (NASDAQ:EAGL). All of these stocks’ market caps are similar to HMST’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SPNS | 5 | 10526 | -1 |
| SBY | 13 | 114745 | -1 |
| UVSP | 3 | 14368 | -3 |
| EAGL | 17 | 239783 | -3 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $16 million in HMST’s case. Double Eagle Acqusition Corp (NASDAQ:EAGL) is the most popular stock in this table. On the other hand Univest Corp. of PA (NASDAQ:UVSP) is the least popular one with only 3 bullish hedge fund positions. HomeStreet Inc (NASDAQ:HMST) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EAGL might be a better candidate to consider taking a long position in.
Disclosure: none.
