The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Haynes International, Inc. (NASDAQ:HAYN) based on those filings.
Is HAYN a good stock to buy now? Haynes International, Inc. (NASDAQ:HAYN) was in 14 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. HAYN shareholders have witnessed an increase in support from the world's most elite money managers lately. There were 13 hedge funds in our database with HAYN positions at the end of the second quarter. Our calculations also showed that HAYN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Paul Marshall of Marshall Wace
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we're going to view the latest hedge fund action encompassing Haynes International, Inc. (NASDAQ:HAYN).
Do Hedge Funds Think HAYN Is A Good Stock To Buy Now?
At the end of September, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HAYN over the last 21 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.
According to Insider Monkey's hedge fund database, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Haynes International, Inc. (NASDAQ:HAYN). Royce & Associates has a $11.9 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, which holds a $10 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism encompass D. E. Shaw's D E Shaw, Cliff Asness's AQR Capital Management and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Haynes International, Inc. (NASDAQ:HAYN), around 0.13% of its 13F portfolio. Value Holdings LP is also relatively very bullish on the stock, setting aside 0.06 percent of its 13F equity portfolio to HAYN.
Consequently, key hedge funds have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in Haynes International, Inc. (NASDAQ:HAYN). Marshall Wace LLP had $0.3 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also made a $0.3 million investment in the stock during the quarter.
Let's check out hedge fund activity in other stocks similar to Haynes International, Inc. (NASDAQ:HAYN). These stocks are Alico, Inc. (NASDAQ:ALCO), PennantPark Investment Corp. (NASDAQ:PNNT), MICT, Inc. (NASDAQ:MICT), Commercial Vehicle Group, Inc. (NASDAQ:CVGI), Horizon Technology Finance Corp (NASDAQ:HRZN), Auryn Resources Inc. (NYSE:AUG), and Priority Technology Holdings, Inc. (NASDAQ:PRTH). This group of stocks' market valuations are similar to HAYN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALCO,7,16369,0 PNNT,6,7914,0 MICT,2,263,1 CVGI,12,35587,-1 HRZN,2,2270,0 AUG,5,3610,2 PRTH,2,1652,-1 Average,5.1,9666,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $30 million in HAYN's case. Commercial Vehicle Group, Inc. (NASDAQ:CVGI) is the most popular stock in this table. On the other hand MICT, Inc. (NASDAQ:MICT) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Haynes International, Inc. (NASDAQ:HAYN) is more popular among hedge funds. Our overall hedge fund sentiment score for HAYN is 82.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on HAYN as the stock returned 48.4% since the end of September (through 12/8) 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.
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