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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Hamilton Lane Incorporated (NASDAQ:HLNE) based on that data and determine whether they were really smart about the stock.
Is Hamilton Lane Incorporated (NASDAQ:HLNE) a healthy stock for your portfolio? The smart money was getting more bullish. The number of bullish hedge fund bets rose by 10 recently. Hamilton Lane Incorporated (NASDAQ:HLNE) was in 19 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 15. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that HLNE isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 9 hedge funds in our database with HLNE positions at the end of the first quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind let's take a glance at the fresh hedge fund action encompassing Hamilton Lane Incorporated (NASDAQ:HLNE).
Hedge fund activity in Hamilton Lane Incorporated (NASDAQ:HLNE)
Heading into the third quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 111% from the first quarter of 2020. On the other hand, there were a total of 6 hedge funds with a bullish position in HLNE a year ago. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Hamilton Lane Incorporated (NASDAQ:HLNE), with a stake worth $51.4 million reported as of the end of September. Trailing Renaissance Technologies was Marshall Wace LLP, which amassed a stake valued at $20.9 million. Columbus Circle Investors, Arrowstreet Capital, and Millennium 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 Pinz Capital allocated the biggest weight to Hamilton Lane Incorporated (NASDAQ:HLNE), around 1.04% of its 13F portfolio. Columbus Circle Investors is also relatively very bullish on the stock, earmarking 0.65 percent of its 13F equity portfolio to HLNE.
As one would reasonably expect, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the largest position in Hamilton Lane Incorporated (NASDAQ:HLNE). Marshall Wace LLP had $20.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $4.7 million position during the quarter. The other funds with brand new HLNE positions are Benjamin A. Smith's Laurion Capital Management, Matthew L Pinz's Pinz Capital, and Michael Gelband's ExodusPoint Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Hamilton Lane Incorporated (NASDAQ:HLNE) but similarly valued. These stocks are Agree Realty Corporation (NYSE:ADC), Regal Beloit Corporation (NYSE:RBC), Power Integrations Inc (NASDAQ:POWI), Madison Square Garden Sports Corp. (NYSE:MSGS), Affiliated Managers Group, Inc. (NYSE:AMG), Blackstone Mortgage Trust Inc (NYSE:BXMT), and Carter's, Inc. (NYSE:CRI). All of these stocks' market caps match HLNE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADC,16,300188,-5 RBC,22,258249,3 POWI,17,89358,-4 MSGS,43,965570,2 AMG,27,355173,0 BXMT,24,160654,5 CRI,33,268651,10 Average,26,342549,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $343 million. That figure was $119 million in HLNE's case. Madison Square Garden Sports Corp. (NYSE:MSGS) is the most popular stock in this table. On the other hand Agree Realty Corporation (NYSE:ADC) is the least popular one with only 16 bullish hedge fund positions. Hamilton Lane Incorporated (NASDAQ:HLNE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HLNE is 45.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately HLNE wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); HLNE investors were disappointed as the stock returned -3.6% in 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.