There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Hasbro, Inc. (NASDAQ:HAS).
Is Hasbro, Inc. (NASDAQ:HAS) the right pick for your portfolio? The smart money is betting on the stock. The number of long hedge fund positions inched up by 6 in recent months. Our calculations also showed that HAS isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the new hedge fund action surrounding Hasbro, Inc. (NASDAQ:HAS).
What have hedge funds been doing with Hasbro, Inc. (NASDAQ:HAS)?
Heading into the third quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HAS over the last 16 quarters. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ken Griffin's Citadel Investment Group has the biggest position in Hasbro, Inc. (NASDAQ:HAS), worth close to $104.1 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which holds a $59.6 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish encompass Tom Gayner's Markel Gayner Asset Management, Dmitry Balyasny's Balyasny Asset Management and John Overdeck and David Siegel's Two Sigma Advisors.
As industrywide interest jumped, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the biggest position in Hasbro, Inc. (NASDAQ:HAS). Balyasny Asset Management had $32.2 million invested in the company at the end of the quarter. Louis Bacon's Moore Global Investments also made a $15.9 million investment in the stock during the quarter. The other funds with new positions in the stock are George Baxter's Sabrepoint Capital, Richard Chilton's Chilton Investment Company, and Dipak Patel's Alight Capital.
Let's check out hedge fund activity in other stocks similar to Hasbro, Inc. (NASDAQ:HAS). We will take a look at Chewy, Inc. (NYSE:CHWY), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), Wayfair Inc (NYSE:W), and Seagate Technology plc (NASDAQ:STX). This group of stocks' market valuations resemble HAS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHWY,38,621104,38 TTWO,60,1521405,10 W,32,2313806,2 STX,23,1870540,-1 Average,38.25,1581714,12.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.25 hedge funds with bullish positions and the average amount invested in these stocks was $1582 million. That figure was $384 million in HAS's case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand Seagate Technology plc (NASDAQ:STX) is the least popular one with only 23 bullish hedge fund positions. Hasbro, Inc. (NASDAQ:HAS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on HAS as the stock returned 12.9% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.