The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards HEICO Corporation (NYSE:HEI).
HEICO Corporation (NYSE:HEI) investors should be aware of a decrease in activity from the world's largest hedge funds recently. Our calculations also showed that HEI isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
To the average investor there are numerous gauges market participants can use to value their holdings. Two of the best gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can outpace their index-focused peers by a superb amount (see the details here).
[caption id="attachment_255014" align="aligncenter" width="394"] Clint Carlson of Carlson Capital[/caption]
At Insider Monkey 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 interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to go over the new hedge fund action encompassing HEICO Corporation (NYSE:HEI).
What does smart money think about HEICO Corporation (NYSE:HEI)?
At Q1's end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of -32% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HEI over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Select Equity Group, managed by Robert Joseph Caruso, holds the most valuable position in HEICO Corporation (NYSE:HEI). Select Equity Group has a $85.6 million position in the stock, comprising 0.6% of its 13F portfolio. The second largest stake is held by Fisher Asset Management, managed by Ken Fisher, which holds a $84.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish consist of Renaissance Technologies, Bo Shan's Gobi Capital and Kevin Kuebler and Ming Lam's Silver Heights Capital Management. In terms of the portfolio weights assigned to each position Silver Heights Capital Management allocated the biggest weight to HEICO Corporation (NYSE:HEI), around 24.09% of its 13F portfolio. Gobi Capital is also relatively very bullish on the stock, earmarking 9.18 percent of its 13F equity portfolio to HEI.
Because HEICO Corporation (NYSE:HEI) has witnessed declining sentiment from hedge fund managers, it's easy to see that there exists a select few money managers that elected to cut their full holdings in the third quarter. It's worth mentioning that Renaissance Technologies dropped the largest investment of the 750 funds monitored by Insider Monkey, worth an estimated $36.3 million in stock. Steve Cohen's fund, Point72 Asset Management, also sold off its stock, about $30.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 18 funds in the third quarter.
Let's go over hedge fund activity in other stocks similar to HEICO Corporation (NYSE:HEI). We will take a look at TELUS Corporation (NYSE:TU), Ulta Beauty, Inc. (NASDAQ:ULTA), The Liberty SiriusXM Group (NASDAQ:LSXMA), and Loews Corporation (NYSE:L). This group of stocks' market values are similar to HEI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TU,15,197962,2 ULTA,46,925549,5 LSXMA,48,1087620,-2 L,21,107581,-3 Average,32.5,579678,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $580 million. That figure was $602 million in HEI's case. The Liberty SiriusXM Group (NASDAQ:LSXMA) is the most popular stock in this table. On the other hand TELUS Corporation (NYSE:TU) is the least popular one with only 15 bullish hedge fund positions. HEICO Corporation (NYSE:HEI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on HEI as the stock returned 35% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.