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These Hedge Funds Cashed Out Of Haverty Furniture Companies, Inc. (HVT) Too Early

Nina Todic

How do we determine whether Haverty Furniture Companies, Inc. (NYSE:HVT) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

Haverty Furniture Companies, Inc. (NYSE:HVT) was in 9 hedge funds' portfolios at the end of the second quarter of 2019. HVT has experienced a decrease in activity from the world's largest hedge funds of late. There were 11 hedge funds in our database with HVT positions at the end of the previous quarter. Our calculations also showed that HVT isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Chuck Royce

Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. We're going to analyze the recent hedge fund action regarding Haverty Furniture Companies, Inc. (NYSE:HVT).

Hedge fund activity in Haverty Furniture Companies, Inc. (NYSE:HVT)

At the end of the second quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the first quarter of 2019. On the other hand, there were a total of 9 hedge funds with a bullish position in HVT a year ago. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

No of Hedge Funds with HVT Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the number one position in Haverty Furniture Companies, Inc. (NYSE:HVT). Renaissance Technologies has a $24.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $19.1 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions comprise Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, D. E. Shaw's D E Shaw and Israel Englander's Millennium Management.

Because Haverty Furniture Companies, Inc. (NYSE:HVT) has witnessed a decline in interest from the smart money, it's easy to see that there exists a select few money managers who were dropping their positions entirely last quarter. Interestingly, Ken Griffin's Citadel Investment Group dumped the largest investment of all the hedgies monitored by Insider Monkey, worth close to $1.5 million in stock. Paul Tudor Jones's fund, Tudor Investment Corp, also cut its stock, about $0.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds last quarter.

Let's check out hedge fund activity in other stocks similar to Haverty Furniture Companies, Inc. (NYSE:HVT). These stocks are West Bancorporation, Inc. (NASDAQ:WTBA), Home Bancorp, Inc. (NASDAQ:HBCP), EverBank Financial Corp (NYSE:EVER), and Merus N.V. (NASDAQ:MRUS). This group of stocks' market values resemble HVT's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WTBA,4,8432,2 HBCP,2,8930,-1 EVER,11,25200,1 MRUS,7,108466,1 Average,6,37757,0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $54 million in HVT's case. EverBank Financial Corp (NYSE:EVER) is the most popular stock in this table. On the other hand Home Bancorp, Inc. (NASDAQ:HBCP) is the least popular one with only 2 bullish hedge fund positions. Haverty Furniture Companies, Inc. (NYSE:HVT) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on HVT as the stock returned 20.2% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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