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We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2019. What do these smart investors think about Hubbell Incorporated (NYSE:HUBB)?
Hubbell Incorporated (NYSE:HUBB) has experienced a decrease in support from the world's most elite money managers in recent months. Our calculations also showed that HUBB isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
To the average investor there are a lot of formulas stock market investors have at their disposal to analyze their stock investments. A duo of the most innovative formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite investment managers can trounce their index-focused peers by a solid amount (see the details here).
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Chuck Royce of Royce & Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Now we're going to check out the recent hedge fund action surrounding Hubbell Incorporated (NYSE:HUBB).
What have hedge funds been doing with Hubbell Incorporated (NYSE:HUBB)?
At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HUBB over the last 18 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Hubbell Incorporated (NYSE:HUBB) was held by Royce & Associates, which reported holding $101.1 million worth of stock at the end of September. It was followed by Impax Asset Management with a $77.5 million position. Other investors bullish on the company included Carlson Capital, Arrowstreet Capital, and AQR Capital Management. In terms of the portfolio weights assigned to each position Carlson Capital allocated the biggest weight to Hubbell Incorporated (NYSE:HUBB), around 0.93% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.9 percent of its 13F equity portfolio to HUBB.
Judging by the fact that Hubbell Incorporated (NYSE:HUBB) has experienced a decline in interest from the aggregate hedge fund industry, it's safe to say that there lies a certain "tier" of hedge funds that elected to cut their positions entirely by the end of the third quarter. At the top of the heap, Dmitry Balyasny's Balyasny Asset Management cut the biggest position of the "upper crust" of funds watched by Insider Monkey, worth about $23.5 million in stock, and Larry Foley and Paul Farrell's Bronson Point Partners was right behind this move, as the fund sold off about $3.3 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Hubbell Incorporated (NYSE:HUBB) but similarly valued. We will take a look at Royal Gold, Inc (NASDAQ:RGLD), Genpact Limited (NYSE:G), Vedanta Ltd (NYSE:VEDL), and Reliance Steel & Aluminum Co. (NYSE:RS). This group of stocks' market values are closest to HUBB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RGLD,30,177674,3 G,37,769167,-1 VEDL,13,74538,2 RS,34,390307,10 Average,28.5,352922,3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $353 million. That figure was $414 million in HUBB's case. Genpact Limited (NYSE:G) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 13 bullish hedge fund positions. Hubbell Incorporated (NYSE:HUBB) 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately HUBB wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HUBB investors were disappointed as the stock returned -26.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.