Where Do Hedge Funds Stand On H&R Block, Inc. (HRB)?

In this article we will analyze whether H&R Block, Inc. (NYSE:HRB) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

H&R Block, Inc. (NYSE:HRB) has seen a decrease in activity from the world’s largest hedge funds of late. H&R Block, Inc. (NYSE:HRB) was in 25 hedge funds’ portfolios at the end of September. The all time high for this statistic is 44. There were 30 hedge funds in our database with HRB holdings at the end of June. Our calculations also showed that HRB 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. With all of this in mind let’s take a peek at the recent hedge fund action surrounding H&R Block, Inc. (NYSE:HRB).

Lee Ainslie of Maverick Capital

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

At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HRB over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

More specifically, D E Shaw was the largest shareholder of H&R Block, Inc. (NYSE:HRB), with a stake worth $35.7 million reported as of the end of September. Trailing D E Shaw was Arrowstreet Capital, which amassed a stake valued at $29.6 million. Fairfax Financial Holdings, AQR Capital Management, 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 Invenomic Capital Management allocated the biggest weight to H&R Block, Inc. (NYSE:HRB), around 3.18% of its 13F portfolio. Rings Capital Management is also relatively very bullish on the stock, dishing out 1.73 percent of its 13F equity portfolio to HRB.

Due to the fact that H&R Block, Inc. (NYSE:HRB) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few hedgies that decided to sell off their positions entirely last quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest stake of the “upper crust” of funds tracked by Insider Monkey, valued at about $7.3 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dropped its stock, about $4 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 5 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to H&R Block, Inc. (NYSE:HRB). We will take a look at Matador Resources Co (NYSE:MTDR), Ryder System, Inc. (NYSE:R), Olo Inc. (NYSE:OLO), Clearwater Analytics Holdings Inc. (NYSE:CWAN), TeleTech Holdings, Inc. (NASDAQ:TTEC), Equitrans Midstream Corporation (NYSE:ETRN), and SeaWorld Entertainment Inc (NYSE:SEAS). This group of stocks’ market values are similar to HRB’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $491 million. That figure was $196 million in HRB’s case. SeaWorld Entertainment Inc (NYSE:SEAS) is the most popular stock in this table. On the other hand Ryder System, Inc. (NYSE:R) is the least popular one with only 16 bullish hedge fund positions. H&R Block, Inc. (NYSE:HRB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HRB is 37.5. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately HRB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HRB were disappointed as the stock returned -4.5% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.

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