The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Hubbell Incorporated (NYSE:HUBB) based on those filings.
Hubbell Incorporated (NYSE:HUBB) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. Our calculations also showed that HUBB 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.
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 S&P 500 ETFs by 58 percentage points since March 2017 (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.
[caption id="attachment_255014" align="aligncenter" width="399"] Clint Carlson of Carlson Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 free email services without phone verification to identify emerging trends that are likely to lead to 1000% gains in the coming years. 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. Now we're going to analyze the key hedge fund action encompassing Hubbell Incorporated (NYSE:HUBB).
How are hedge funds trading Hubbell Incorporated (NYSE:HUBB)?
Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -35% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in HUBB a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Impax Asset Management was the largest shareholder of Hubbell Incorporated (NYSE:HUBB), with a stake worth $77.1 million reported as of the end of September. Trailing Impax Asset Management was Royce & Associates, which amassed a stake valued at $56.9 million. Carlson Capital, Renaissance Technologies, and AQR Capital Management 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 Carlson Capital allocated the biggest weight to Hubbell Incorporated (NYSE:HUBB), around 1.14% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, earmarking 1.03 percent of its 13F equity portfolio to HUBB.
Seeing as Hubbell Incorporated (NYSE:HUBB) has experienced falling interest from the entirety of the hedge funds we track, we can see that there exists a select few funds who were dropping their full holdings by the end of the first quarter. Interestingly, Alexander Mitchell's Scopus Asset Management said goodbye to the largest investment of the 750 funds monitored by Insider Monkey, comprising an estimated $17.8 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund dumped about $6.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 8 funds by the end of the first quarter.
Let's also examine hedge fund activity in other stocks similar to Hubbell Incorporated (NYSE:HUBB). These stocks are Assurant, Inc. (NYSE:AIZ), Alteryx, Inc. (NYSE:AYX), Universal Display Corporation (NASDAQ:OLED), and PPD, Inc. (NASDAQ:PPD). All of these stocks' market caps match HUBB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AIZ,33,782609,8 AYX,43,1019690,-1 OLED,24,222953,-7 PPD,27,512293,27 Average,31.75,634386,6.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.75 hedge funds with bullish positions and the average amount invested in these stocks was $634 million. That figure was $272 million in HUBB's case. Alteryx, Inc. (NYSE:AYX) is the most popular stock in this table. On the other hand Universal Display Corporation (NASDAQ:OLED) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Hubbell Incorporated (NYSE:HUBB) is even less popular than OLED. Hedge funds dodged a bullet by taking a bearish stance towards HUBB. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but managed to beat the market by 16.8 percentage points. Unfortunately HUBB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); HUBB investors were disappointed as the stock returned 5.3% during the second quarter (through June 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.