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Is Howmet Aerospace Inc. (NYSE:HWM) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Howmet Aerospace Inc. (NYSE:HWM) has experienced a decrease in activity from the world's largest hedge funds lately. Howmet Aerospace Inc. (NYSE:HWM) was in 47 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 51. Our calculations also showed that HWM isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Lowenstein of Kensico Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to check out the key hedge fund action regarding Howmet Aerospace Inc. (NYSE:HWM).
Do Hedge Funds Think HWM Is A Good Stock To Buy Now?
At the end of June, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HWM over the last 24 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Elliott Investment Management held the most valuable stake in Howmet Aerospace Inc. (NYSE:HWM), which was worth $1415.5 million at the end of the second quarter. On the second spot was Orbis Investment Management which amassed $722.9 million worth of shares. Kensico Capital, First Pacific Advisors LLC, and Steadfast 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 Elliott Investment Management allocated the biggest weight to Howmet Aerospace Inc. (NYSE:HWM), around 10.89% of its 13F portfolio. Kensico Capital is also relatively very bullish on the stock, setting aside 9.34 percent of its 13F equity portfolio to HWM.
Seeing as Howmet Aerospace Inc. (NYSE:HWM) has witnessed a decline in interest from the aggregate hedge fund industry, it's easy to see that there is a sect of money managers that slashed their entire stakes in the second quarter. Intriguingly, Joshua Friedman and Mitchell Julis's Canyon Capital Advisors dumped the biggest position of all the hedgies tracked by Insider Monkey, comprising close to $65.9 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund said goodbye to about $46.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 4 funds in the second quarter.
Let's check out hedge fund activity in other stocks similar to Howmet Aerospace Inc. (NYSE:HWM). We will take a look at Molina Healthcare, Inc. (NYSE:MOH), Agnico Eagle Mines Limited (NYSE:AEM), GDS Holdings Limited (NASDAQ:GDS), Godaddy Inc (NYSE:GDDY), Citrix Systems, Inc. (NASDAQ:CTXS), UDR, Inc. (NYSE:UDR), and Fair Isaac Corporation (NYSE:FICO). This group of stocks' market valuations are closest to HWM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MOH,34,1618744,3 AEM,29,235678,1 GDS,38,1648522,-2 GDDY,39,2769173,0 CTXS,23,668537,3 UDR,24,251040,-6 FICO,28,1224920,1 Average,30.7,1202373,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.7 hedge funds with bullish positions and the average amount invested in these stocks was $1202 million. That figure was $3893 million in HWM's case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand Citrix Systems, Inc. (NASDAQ:CTXS) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Howmet Aerospace Inc. (NYSE:HWM) is more popular among hedge funds. Our overall hedge fund sentiment score for HWM is 78.6. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Unfortunately HWM wasn't nearly as popular as these 5 stocks and hedge funds that were betting on HWM were disappointed as the stock returned -5.9% since the end of the second quarter (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.