We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Harley-Davidson, Inc. (NYSE:HOG) and determine whether hedge funds skillfully traded this stock.
Harley-Davidson, Inc. (NYSE:HOG) was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 37. HOG shareholders have witnessed a decrease in hedge fund sentiment recently. There were 37 hedge funds in our database with HOG holdings at the end of June. Our calculations also showed that HOG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now we’re going to view the recent hedge fund action encompassing Harley-Davidson, Inc. (NYSE:HOG).
Do Hedge Funds Think HOG Is A Good Stock To Buy Now?
At the end of September, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in HOG over the last 25 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, H Partners Management was the largest shareholder of Harley-Davidson, Inc. (NYSE:HOG), with a stake worth $410 million reported as of the end of September. Trailing H Partners Management was D E Shaw, which amassed a stake valued at $133.5 million. Impala Asset Management, Brahman Capital, and Renaissance Technologies 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 H Partners Management allocated the biggest weight to Harley-Davidson, Inc. (NYSE:HOG), around 37.17% of its 13F portfolio. Impala Asset Management is also relatively very bullish on the stock, dishing out 8.06 percent of its 13F equity portfolio to HOG.
Since Harley-Davidson, Inc. (NYSE:HOG) has witnessed declining sentiment from hedge fund managers, we can see that there was a specific group of funds who sold off their positions entirely in the third quarter. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management sold off the biggest investment of the 750 funds watched by Insider Monkey, totaling about $38.9 million in call options, and Peter Avellone’s Cartenna Capital was right behind this move, as the fund said goodbye to about $18.3 million worth. These moves are important to note, as aggregate hedge fund interest fell by 4 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Harley-Davidson, Inc. (NYSE:HOG) but similarly valued. We will take a look at Southwestern Energy Company (NYSE:SWN), Colliers International Group Inc (NASDAQ:CIGI), Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI), Grupo Aeroportuario del Sureste (NYSE:ASR), Paysafe Limited (NYSE:PSFE), Luminar Technologies, Inc. (NASDAQ:LAZR), and Goosehead Insurance, Inc. (NASDAQ:GSHD). This group of stocks’ market values are closest to HOG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SWN | 22 | 263603 | -5 |
| CIGI | 16 | 726941 | -1 |
| MRVI | 34 | 1068071 | 14 |
| ASR | 2 | 23593 | -3 |
| PSFE | 42 | 597243 | -8 |
| LAZR | 12 | 111108 | -9 |
| GSHD | 13 | 210178 | -1 |
| Average | 20.1 | 428677 | -1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $429 million. That figure was $956 million in HOG’s case. Paysafe Limited (NYSE:PSFE) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste (NYSE:ASR) is the least popular one with only 2 bullish hedge fund positions. Harley-Davidson, Inc. (NYSE:HOG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOG is 66.5. 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 positive signal but 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, HOG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HOG were disappointed as the stock returned -5.2% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
