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Is Haemonetics Corporation (HAE) A Good Stock To Buy?

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·5 min read
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Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Haemonetics Corporation (NYSE:HAE).

Is HAE a good stock to buy now? Investors who are in the know were getting less bullish. The number of bullish hedge fund bets shrunk by 7 lately. Haemonetics Corporation (NYSE:HAE) was in 30 hedge funds' portfolios at the end of June. The all time high for this statistic is 39. Our calculations also showed that HAE isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are several signals investors employ to appraise stocks. A duo of the most innovative signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can outperform the S&P 500 by a very impressive amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.


Ken Fisher of Fisher Asset Management

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. Keeping this in mind let's view the key hedge fund action encompassing Haemonetics Corporation (NYSE:HAE).

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

At the end of June, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from one quarter earlier. On the other hand, there were a total of 39 hedge funds with a bullish position in HAE a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Fisher Asset Management held the most valuable stake in Haemonetics Corporation (NYSE:HAE), which was worth $73.2 million at the end of the second quarter. On the second spot was Armistice Capital which amassed $41.6 million worth of shares. Millennium Management, Royce & Associates, 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 Prosight Capital allocated the biggest weight to Haemonetics Corporation (NYSE:HAE), around 5.58% of its 13F portfolio. Beach Point Capital Management is also relatively very bullish on the stock, dishing out 4.41 percent of its 13F equity portfolio to HAE.

Due to the fact that Haemonetics Corporation (NYSE:HAE) has experienced declining sentiment from the smart money, it's safe to say that there exists a select few money managers who were dropping their full holdings by the end of the second quarter. Interestingly, OrbiMed Advisors dumped the largest position of the 750 funds followed by Insider Monkey, totaling close to $94.6 million in stock. Brian Ashford-Russell and Tim Woolley's fund, Polar Capital, also sold off its stock, about $37.6 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 7 funds by the end of the second quarter.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Haemonetics Corporation (NYSE:HAE) but similarly valued. These stocks are Turquoise Hill Resources Ltd (NYSE:TRQ), Agios Pharmaceuticals Inc (NASDAQ:AGIO), Visteon Corp (NASDAQ:VC), Relay Therapeutics, Inc. (NASDAQ:RLAY), Emergent Biosolutions Inc (NYSE:EBS), SmileDirectClub, Inc. (NASDAQ:SDC), and Karuna Therapeutics, Inc. (NASDAQ:KRTX). This group of stocks' market values resemble HAE's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRQ,11,620309,-2 AGIO,19,408165,-3 VC,20,175914,0 RLAY,17,658614,-3 EBS,15,124614,2 SDC,19,135469,-2 KRTX,18,366239,-5 Average,17,355618,-1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $356 million. That figure was $393 million in HAE's case. Visteon Corp (NASDAQ:VC) is the most popular stock in this table. On the other hand Turquoise Hill Resources Ltd (NYSE:TRQ) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Haemonetics Corporation (NYSE:HAE) is more popular among hedge funds. Our overall hedge fund sentiment score for HAE is 71.1. 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. 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 returned 24.9% in 2021 through October 15th but still managed to beat the market by 4.5 percentage points. Hedge funds were also right about betting on HAE as the stock returned 4.9% since the end of June (through 10/15) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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