The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtHyster-Yale Materials Handling Inc (NYSE:HY) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Hyster-Yale Materials Handling Inc (NYSE:HY) was in 10 hedge funds' portfolios at the end of the first quarter of 2020. HY shareholders have witnessed an increase in enthusiasm from smart money in recent months. There were 9 hedge funds in our database with HY positions at the end of the previous quarter. Our calculations also showed that HY 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). Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_193003" align="aligncenter" width="392"] Chuck Royce of Royce & Associates[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. 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 we're going to take a peek at the key hedge fund action regarding Hyster-Yale Materials Handling Inc (NYSE:HY).
How are hedge funds trading Hyster-Yale Materials Handling Inc (NYSE:HY)?
At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the fourth quarter of 2019. On the other hand, there were a total of 11 hedge funds with a bullish position in HY a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Hyster-Yale Materials Handling Inc (NYSE:HY) was held by GAMCO Investors, which reported holding $9.1 million worth of stock at the end of September. It was followed by Royce & Associates with a $8 million position. Other investors bullish on the company included Diamond Hill Capital, Millennium Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Hyster-Yale Materials Handling Inc (NYSE:HY), around 0.11% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.11 percent of its 13F equity portfolio to HY.
Consequently, specific money managers have jumped into Hyster-Yale Materials Handling Inc (NYSE:HY) headfirst. Millennium Management, managed by Israel Englander, created the most valuable position in Hyster-Yale Materials Handling Inc (NYSE:HY). Millennium Management had $2.5 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $0.4 million position during the quarter. The only other fund with a brand new HY position is Greg Eisner's Engineers Gate Manager.
Let's go over hedge fund activity in other stocks similar to Hyster-Yale Materials Handling Inc (NYSE:HY). These stocks are Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM), Re/Max Holdings Inc (NYSE:RMAX), OrthoPediatrics Corp. (NASDAQ:KIDS), and Mr. Cooper Group Inc. (NASDAQ:COOP). This group of stocks' market valuations are similar to HY's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RYTM,9,186440,-1 RMAX,6,31947,-11 KIDS,7,43469,-4 COOP,19,177754,-4 Average,10.25,109903,-5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $27 million in HY's case. Mr. Cooper Group Inc. (NASDAQ:COOP) is the most popular stock in this table. On the other hand Re/Max Holdings Inc (NYSE:RMAX) is the least popular one with only 6 bullish hedge fund positions. Hyster-Yale Materials Handling Inc (NYSE:HY) 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 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately HY wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); HY investors were disappointed as the stock returned -2.8% during the second 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.