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Hedge Funds Have Never Been This Bullish On HEICO Corporation (HEI)

Nina Todic

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on HEICO Corporation (NYSE:HEI).

HEICO Corporation (NYSE:HEI) shareholders have witnessed an increase in enthusiasm from smart money recently. Our calculations also showed that HEI isn't among the 30 most popular stocks among hedge funds.

At the moment there are numerous tools stock market investors use to grade publicly traded companies. A couple of the most under-the-radar tools are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the best fund managers can beat the market by a healthy margin (see the details here).

[caption id="attachment_193003" align="aligncenter" width="450"] Chuck Royce of Royce & Associates[/caption]

Chuck Royce

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a peek at the recent hedge fund action encompassing HEICO Corporation (NYSE:HEI).

What does smart money think about HEICO Corporation (NYSE:HEI)?

At Q3's end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HEI over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with HEI Positions

Among these funds, Renaissance Technologies held the most valuable stake in HEICO Corporation (NYSE:HEI), which was worth $176 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $175.2 million worth of shares. Royce & Associates, Select Equity Group, and Chilton Investment Company were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fort Baker Capital Management allocated the biggest weight to HEICO Corporation (NYSE:HEI), around 7.98% of its portfolio. Giverny Capital is also relatively very bullish on the stock, designating 4.71 percent of its 13F equity portfolio to HEI.

Consequently, some big names have jumped into HEICO Corporation (NYSE:HEI) headfirst. Whitebox Advisors, managed by Andy Redleaf, created the most valuable position in HEICO Corporation (NYSE:HEI). Whitebox Advisors had $25.2 million invested in the company at the end of the quarter. Clint Carlson's Carlson Capital also initiated a $23.8 million position during the quarter. The following funds were also among the new HEI investors: Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, Renaissance Technologies, and Steve Pigott's Fort Baker Capital Management.

Let's also examine hedge fund activity in other stocks similar to HEICO Corporation (NYSE:HEI). These stocks are ZTO Express (Cayman) Inc. (NYSE:ZTO), Check Point Software Technologies Ltd. (NASDAQ:CHKP), Arthur J. Gallagher & Co. (NYSE:AJG), and Magna International Inc. (NYSE:MGA). This group of stocks' market caps are closest to HEI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZTO,19,505301,4 CHKP,20,407935,-4 AJG,23,286963,-2 MGA,17,432332,3 Average,19.75,408133,0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $408 million. That figure was $1149 million in HEI's case. Arthur J. Gallagher & Co. (NYSE:AJG) is the most popular stock in this table. On the other hand Magna International Inc. (NYSE:MGA) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks HEICO Corporation (NYSE:HEI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately HEI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HEI were disappointed as the stock returned 3.2% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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

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