"Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn't by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today's darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn't attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal," said Vilas Fund in its Q1 investor letter. We aren't sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Hingham Institution for Savings (NASDAQ:HIFS).
Hingham Institution for Savings (NASDAQ:HIFS) has seen an increase in enthusiasm from smart money of late. Our calculations also showed that HIFS isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. We're going to review the new hedge fund action encompassing Hingham Institution for Savings (NASDAQ:HIFS).
What have hedge funds been doing with Hingham Institution for Savings (NASDAQ:HIFS)?
Heading into the third quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 400% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HIFS over the last 16 quarters. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the largest position in Hingham Institution for Savings (NASDAQ:HIFS). Renaissance Technologies has a $5.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Richard Driehaus of Driehaus Capital, with a $0.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that hold long positions contain Ken Griffin's Citadel Investment Group, Paul Marshall and Ian Wace's Marshall Wace LLP and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
As aggregate interest increased, key hedge funds were leading the bulls' herd. Driehaus Capital, managed by Richard Driehaus, established the most valuable position in Hingham Institution for Savings (NASDAQ:HIFS). Driehaus Capital had $0.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace LLP and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Hingham Institution for Savings (NASDAQ:HIFS) but similarly valued. These stocks are New Frontier Corp (NYSE:NFC), Insteel Industries Inc (NASDAQ:IIIN), Farmers National Banc Corp (NASDAQ:FMNB), and Sierra Bancorp (NASDAQ:BSRR). This group of stocks' market valuations match HIFS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NFC,12,56016,-1 IIIN,6,44459,-2 FMNB,6,12608,1 BSRR,7,17254,1 Average,7.75,32584,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $7 million in HIFS's case. New Frontier Corp (NYSE:NFC) is the most popular stock in this table. On the other hand Insteel Industries Inc (NASDAQ:IIIN) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Hingham Institution for Savings (NASDAQ:HIFS) is even less popular than IIIN. Hedge funds dodged a bullet by taking a bearish stance towards HIFS. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HIFS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); HIFS investors were disappointed as the stock returned -4.4% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.