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Do Hedge Funds Love At Home Group Inc. (HOME)?

Abigail Fisher

In this article you are going to find out whether hedge funds think At Home Group Inc. (NYSE:HOME) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

At Home Group Inc. (NYSE:HOME) has seen a decrease in enthusiasm from smart money of late. Our calculations also showed that HOME 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.

In the eyes of most investors, hedge funds are assumed to be worthless, outdated financial tools of the past. While there are over 8000 funds with their doors open today, We choose to focus on the aristocrats of this club, approximately 850 funds. These money managers orchestrate the lion's share of the hedge fund industry's total asset base, and by paying attention to their highest performing equity investments, Insider Monkey has formulated many investment strategies that have historically outperformed the broader indices. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

[caption id="attachment_678007" align="aligncenter" width="397"] Clifford Sosin of CAS Investment Partners[/caption]

CAS Investment Partners, Cliff Sosin

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to view the latest hedge fund action regarding At Home Group Inc. (NYSE:HOME).

How have hedgies been trading At Home Group Inc. (NYSE:HOME)?

Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from the fourth quarter of 2019. On the other hand, there were a total of 32 hedge funds with a bullish position in HOME a year ago. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

The largest stake in At Home Group Inc. (NYSE:HOME) was held by CAS Investment Partners, which reported holding $21.1 million worth of stock at the end of September. It was followed by Prentice Capital Management with a $12.7 million position. Other investors bullish on the company included Rima Senvest Management, Millennium Management, and Brightlight Capital. In terms of the portfolio weights assigned to each position Prentice Capital Management allocated the biggest weight to At Home Group Inc. (NYSE:HOME), around 6.02% of its 13F portfolio. CAS Investment Partners is also relatively very bullish on the stock, designating 4.63 percent of its 13F equity portfolio to HOME.

Due to the fact that At Home Group Inc. (NYSE:HOME) has experienced declining sentiment from the smart money, it's safe to say that there lies a certain "tier" of hedgies that elected to cut their full holdings heading into Q4. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP sold off the biggest stake of all the hedgies monitored by Insider Monkey, valued at about $6.2 million in stock. Mendel Hui's fund, Isomer Partners, also cut its stock, about $5.5 million worth. These moves are important to note, as aggregate hedge fund interest fell by 4 funds heading into Q4.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as At Home Group Inc. (NYSE:HOME) but similarly valued. These stocks are Senseonics Holdings, Inc. (NYSE:SENS), Sharps Compliance Corp. (NASDAQ:SMED), Exicure, Inc. (NASDAQ:XCUR), and The Community Financial Corp (NASDAQ:TCFC). All of these stocks' market caps are closest to HOME's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SENS,7,3396,0 SMED,5,8307,4 XCUR,11,26112,0 TCFC,3,15041,0 Average,6.5,13214,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $47 million in HOME's case. Exicure, Inc. (NASDAQ:XCUR) is the most popular stock in this table. On the other hand The Community Financial Corp (NASDAQ:TCFC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks At Home Group Inc. (NYSE:HOME) is more popular among hedge funds. 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 returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on HOME as the stock returned 252% so far in Q2 (through June 25th) 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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