In this article we will take a look at whether hedge funds think Huttig Building Products, Inc. (NASDAQ:HBP) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Huttig Building Products, Inc. (NASDAQ:HBP) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Foresight Autonomous Holdings Ltd. (NASDAQ:FRSX), HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM), and GSE Systems, Inc. (NYSE:GVP) to gather more data points. Our calculations also showed that HBP 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_27676" align="aligncenter" width="400"] Israel Englander of Millennium Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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 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 check out the latest hedge fund action encompassing Huttig Building Products, Inc. (NASDAQ:HBP).
Hedge fund activity in Huttig Building Products, Inc. (NASDAQ:HBP)
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 3 hedge funds with a bullish position in HBP a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in Huttig Building Products, Inc. (NASDAQ:HBP) was held by Phoenician Capital, which reported holding $0.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $0.2 million position. The only other hedge fund that is bullish on the company was Millennium Management.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's check out hedge fund activity in other stocks similar to Huttig Building Products, Inc. (NASDAQ:HBP). These stocks are Foresight Autonomous Holdings Ltd. (NASDAQ:FRSX), HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM), GSE Systems, Inc. (NASDAQ:GVP), and Jewett-Cameron Trading Co Ltd. (NASDAQ:JCTCF). This group of stocks' market caps are similar to HBP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FRSX,1,7,-1 HTGM,4,1995,2 GVP,2,834,-1 JCTCF,1,998,0 Average,2,959,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $0 million in HBP's case. HTG Molecular Diagnostics, Inc. (NASDAQ:HTGM) is the most popular stock in this table. On the other hand Foresight Autonomous Holdings Ltd. (NASDAQ:FRSX) is the least popular one with only 1 bullish hedge fund positions. Huttig Building Products, Inc. (NASDAQ:HBP) 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 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on HBP as the stock returned 78.6% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.