We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Hawkins, Inc. (NASDAQ:HWKN).
Hawkins, Inc. (NASDAQ:HWKN) investors should pay attention to an increase in enthusiasm from smart money in recent months. Our calculations also showed that HWKN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to analyze the latest hedge fund action encompassing Hawkins, Inc. (NASDAQ:HWKN).
Hedge fund activity in Hawkins, Inc. (NASDAQ:HWKN)
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HWKN over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Hawkins, Inc. (NASDAQ:HWKN), which was worth $4.1 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $3.9 million worth of shares. Winton Capital Management, Citadel Investment Group, and Two Sigma Advisors 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 Algert Coldiron Investors allocated the biggest weight to Hawkins, Inc. (NASDAQ:HWKN), around 0.08% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.04 percent of its 13F equity portfolio to HWKN.
As aggregate interest increased, some big names were breaking ground themselves. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, assembled the most valuable position in Hawkins, Inc. (NASDAQ:HWKN). Algert Coldiron Investors had $0.2 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace also initiated a $0.2 million position during the quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Hawkins, Inc. (NASDAQ:HWKN) but similarly valued. We will take a look at Lannett Company, Inc. (NYSE:LCI), Powell Industries, Inc. (NASDAQ:POWL), Turning Point Brands, Inc. (NYSE:TPB), and Maxar Technologies Inc. (NYSE:MAXR). All of these stocks' market caps resemble HWKN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LCI,14,83065,2 POWL,16,48089,5 TPB,17,39440,3 MAXR,19,37391,7 Average,16.5,51996,4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $11 million in HWKN's case. Maxar Technologies Inc. (NYSE:MAXR) is the most popular stock in this table. On the other hand Lannett Company, Inc. (NYSE:LCI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Hawkins, Inc. (NASDAQ:HWKN) is even less popular than LCI. Hedge funds dodged a bullet by taking a bearish stance towards HWKN. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately HWKN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); HWKN investors were disappointed as the stock returned -2.3% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.