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We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Hamilton Lane Incorporated (NASDAQ:HLNE)? The smart money sentiment can provide an answer to this question.
Is Hamilton Lane Incorporated (NASDAQ:HLNE) worth your attention right now? Investors who are in the know are taking a pessimistic view. The number of long hedge fund positions retreated by 5 in recent months. Our calculations also showed that HLNE isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In today’s marketplace there are plenty of gauges stock market investors use to size up stocks. A duo of the less known gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can trounce their index-focused peers by a superb margin (see the details here).
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John Overdeck of Two Sigma Advisors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Now let's view the latest hedge fund action encompassing Hamilton Lane Incorporated (NASDAQ:HLNE).
What does smart money think about Hamilton Lane Incorporated (NASDAQ:HLNE)?
At Q4's end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in HLNE 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.
The largest stake in Hamilton Lane Incorporated (NASDAQ:HLNE) was held by Renaissance Technologies, which reported holding $50.8 million worth of stock at the end of September. It was followed by Columbus Circle Investors with a $11.1 million position. Other investors bullish on the company included Driehaus Capital, D E Shaw, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Columbus Circle Investors allocated the biggest weight to Hamilton Lane Incorporated (NASDAQ:HLNE), around 0.48% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, setting aside 0.11 percent of its 13F equity portfolio to HLNE.
Because Hamilton Lane Incorporated (NASDAQ:HLNE) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of hedgies who sold off their entire stakes last quarter. Intriguingly, Jeffrey Talpins's Element Capital Management dumped the biggest position of the 750 funds monitored by Insider Monkey, worth close to $8.2 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also dumped its stock, about $7.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 5 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Hamilton Lane Incorporated (NASDAQ:HLNE). These stocks are Brooks Automation, Inc. (NASDAQ:BRKS), Cogent Communications Holdings, Inc. (NASDAQ:CCOI), Vishay Intertechnology, Inc. (NYSE:VSH), and Sinclair Broadcast Group, Inc. (NASDAQ:SBGI). This group of stocks' market caps match HLNE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRKS,28,206427,14 CCOI,24,405167,-6 VSH,20,363288,-3 SBGI,33,406464,4 Average,26.25,345337,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $345 million. That figure was $78 million in HLNE's case. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is the most popular stock in this table. On the other hand Vishay Intertechnology, Inc. (NYSE:VSH) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Hamilton Lane Incorporated (NASDAQ:HLNE) is even less popular than VSH. Hedge funds clearly dropped the ball on HLNE as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but still beat the market by 4.2 percentage points. A small number of hedge funds were also right about betting on HLNE as the stock returned -8.2% during the same time period and outperformed the market by an even larger margin.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.