The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and prominent investors' filings. In this article, we analyze how these elite funds and prominent investors traded Hexcel Corporation (NYSE:HXL) based on those filings.
Hexcel Corporation (NYSE:HXL) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 23 hedge funds' portfolios at the end of the fourth quarter of 2018. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as HubSpot Inc (NYSE:HUBS), Monolithic Power Systems, Inc. (NASDAQ:MPWR), and Coty Inc (NYSE:COTY) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to analyze the new hedge fund action encompassing Hexcel Corporation (NYSE:HXL).
Hedge fund activity in Hexcel Corporation (NYSE:HXL)
At Q4's end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in HXL over the last 14 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in Hexcel Corporation (NYSE:HXL) was held by Joho Capital, which reported holding $39.8 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $23.5 million position. Other investors bullish on the company included Alyeska Investment Group, D E Shaw, and Point72 Asset Management.
Because Hexcel Corporation (NYSE:HXL) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few funds who were dropping their positions entirely by the end of the third quarter. Intriguingly, Jim Simons's Renaissance Technologies dropped the largest stake of the 700 funds tracked by Insider Monkey, valued at about $3.9 million in stock. Joe DiMenna's fund, ZWEIG DIMENNA PARTNERS, also cut its stock, about $3.4 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to Hexcel Corporation (NYSE:HXL). These stocks are HubSpot Inc (NYSE:HUBS), Monolithic Power Systems, Inc. (NASDAQ:MPWR), Coty Inc (NYSE:COTY), and Momo Inc (NASDAQ:MOMO). This group of stocks' market values match HXL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HUBS,22,349232,1 MPWR,25,170884,7 COTY,19,132043,-5 MOMO,21,521092,-24 Average,21.75,293313,-5.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $293 million. That figure was $151 million in HXL's case. Monolithic Power Systems, Inc. (NASDAQ:MPWR) is the most popular stock in this table. On the other hand Coty Inc (NYSE:COTY) is the least popular one with only 19 bullish hedge fund positions. Hexcel Corporation (NYSE:HXL) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on HXL, though not to the same extent, as the stock returned 19.3% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.