The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Bank of Hawaii Corporation (NYSE:BOH).
Is Bank of Hawaii Corporation (NYSE:BOH) a buy here? Investors who are in the know are taking a bullish view. The number of bullish hedge fund positions increased by 1 in recent months. Our calculations also showed that BOH 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). BOH was in 17 hedge funds' portfolios at the end of the first quarter of 2020. There were 16 hedge funds in our database with BOH holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
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 S&P 500 ETFs by more than 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_30621" align="aligncenter" width="400"] Cliff Asness of AQR Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a gander at the new hedge fund action surrounding Bank of Hawaii Corporation (NYSE:BOH).
Hedge fund activity in Bank of Hawaii Corporation (NYSE:BOH)
At Q1's end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BOH over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Bank of Hawaii Corporation (NYSE:BOH), which was worth $34.6 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $12.4 million worth of shares. Citadel Investment Group, AQR Capital Management, and Winton 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 Royce & Associates allocated the biggest weight to Bank of Hawaii Corporation (NYSE:BOH), around 0.17% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.15 percent of its 13F equity portfolio to BOH.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in Bank of Hawaii Corporation (NYSE:BOH). Arrowstreet Capital had $0.9 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $0.6 million position during the quarter. The other funds with brand new BOH positions are D. E. Shaw's D E Shaw, Matthew Hulsizer's PEAK6 Capital Management, and Peter Muller's PDT Partners.
Let's now take a look at hedge fund activity in other stocks similar to Bank of Hawaii Corporation (NYSE:BOH). These stocks are National Health Investors Inc (NYSE:NHI), Independent Bank Corp (NASDAQ:INDB), SINA Corp (NASDAQ:SINA), and Mimecast Limited (NASDAQ:MIME). This group of stocks' market valuations match BOH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NHI,13,99642,-2 INDB,4,10050,-10 SINA,13,124514,-5 MIME,39,517022,8 Average,17.25,187807,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $75 million in BOH's case. Mimecast Limited (NASDAQ:MIME) is the most popular stock in this table. On the other hand Independent Bank Corp (NASDAQ:INDB) is the least popular one with only 4 bullish hedge fund positions. Bank of Hawaii Corporation (NYSE:BOH) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately BOH wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BOH investors were disappointed as the stock returned 15.2% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.