Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Hilltop Holdings Inc. (NYSE:HTH).
Is Hilltop Holdings Inc. (NYSE:HTH) a buy right now? Investors who are in the know are reducing their bets on the stock. The number of bullish hedge fund positions shrunk by 4 lately. Our calculations also showed that HTH 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). HTH was in 15 hedge funds' portfolios at the end of the first quarter of 2020. There were 19 hedge funds in our database with HTH holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_30621" align="aligncenter" width="400"] Cliff Asness of AQR Capital Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. 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. With all of this in mind let's take a glance at the recent hedge fund action encompassing Hilltop Holdings Inc. (NYSE:HTH).
Hedge fund activity in Hilltop Holdings Inc. (NYSE:HTH)
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in HTH a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the largest position in Hilltop Holdings Inc. (NYSE:HTH). Renaissance Technologies has a $14.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, holding a $10.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish contain Israel Englander's Millennium Management, Cliff Asness's AQR Capital Management and Paul Magidson, Jonathan Cohen. And Ostrom Enders's Castine Capital Management. In terms of the portfolio weights assigned to each position Castine Capital Management allocated the biggest weight to Hilltop Holdings Inc. (NYSE:HTH), around 3.14% of its 13F portfolio. Forest Hill Capital is also relatively very bullish on the stock, dishing out 3.04 percent of its 13F equity portfolio to HTH.
Due to the fact that Hilltop Holdings Inc. (NYSE:HTH) has faced falling interest from the entirety of the hedge funds we track, it's safe to say that there is a sect of funds that elected to cut their positions entirely by the end of the first quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital said goodbye to the biggest stake of the "upper crust" of funds watched by Insider Monkey, comprising an estimated $11.2 million in stock, and Michael Gelband's ExodusPoint Capital was right behind this move, as the fund said goodbye to about $2.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds by the end of the first quarter.
Let's now review hedge fund activity in other stocks similar to Hilltop Holdings Inc. (NYSE:HTH). These stocks are SailPoint Technologies Holdings, Inc. (NYSE:SAIL), CSG Systems International, Inc. (NASDAQ:CSGS), InterDigital, Inc. (NASDAQ:IDCC), and The Goodyear Tire & Rubber Company (NASDAQ:GT). All of these stocks' market caps are similar to HTH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SAIL,21,204302,-4 CSGS,19,170275,-4 IDCC,23,289642,-4 GT,26,129699,-6 Average,22.25,198480,-4.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $198 million. That figure was $59 million in HTH's case. The Goodyear Tire & Rubber Company (NASDAQ:GT) is the most popular stock in this table. On the other hand CSG Systems International, Inc. (NASDAQ:CSGS) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Hilltop Holdings Inc. (NYSE:HTH) is even less popular than CSGS. 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 13.3% in 2020 through June 25th but managed to beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on HTH, though not to the same extent, as the stock returned 20.8% during the second quarter (through June 25th) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.