The market has been volatile in the last 6 months as the Federal Reserve continued its rate hikes and then abruptly reversed its stance and uncertainty looms over trade negotiations with China. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 9 percentage points. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, though some funds increased their exposure dramatically at the end of Q4 and the beginning of Q1. In this article, we analyze what the smart money thinks of Hometrust Bancshares Inc (NASDAQ:HTBI) and find out how it is affected by hedge funds' moves.
Hometrust Bancshares Inc (NASDAQ:HTBI) investors should be aware of an increase in hedge fund sentiment lately. Our calculations also showed that HTBI isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let's take a gander at the new hedge fund action surrounding Hometrust Bancshares Inc (NASDAQ:HTBI).
Hedge fund activity in Hometrust Bancshares Inc (NASDAQ:HTBI)
At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HTBI over the last 15 quarters. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, Impax Asset Management held the most valuable stake in Hometrust Bancshares Inc (NASDAQ:HTBI), which was worth $23.1 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $21.8 million worth of shares. Moreover, Private Capital Management, Prospector Partners, and Royce & Associates were also bullish on Hometrust Bancshares Inc (NASDAQ:HTBI), allocating a large percentage of their portfolios to this stock.
Consequently, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, assembled the biggest position in Hometrust Bancshares Inc (NASDAQ:HTBI). Citadel Investment Group had $0.5 million invested in the company at the end of the quarter. David Harding's Winton Capital Management also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new HTBI position is Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Hometrust Bancshares Inc (NASDAQ:HTBI) but similarly valued. These stocks are Gilat Satellite Networks Ltd. (NASDAQ:GILT), Vishay Precision Group Inc (NYSE:VPG), Waterstone Financial, Inc. (NASDAQ:WSBF), and Translate Bio, Inc. (NASDAQ:TBIO). All of these stocks' market caps resemble HTBI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GILT,2,25518,0 VPG,11,128808,-2 WSBF,11,76446,2 TBIO,7,88688,0 Average,7.75,79865,0 [/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 $80 million. That figure was $67 million in HTBI's case. Vishay Precision Group Inc (NYSE:VPG) is the most popular stock in this table. On the other hand Gilat Satellite Networks Ltd. (NASDAQ:GILT) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Hometrust Bancshares Inc (NASDAQ:HTBI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately HTBI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HTBI were disappointed as the stock returned -1.5% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.