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Is HIL A Good Stock To Buy Now?

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·6 min read
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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Hill International Inc (NYSE:HIL).

Is HIL a good stock to buy now? Hill International Inc (NYSE:HIL) was in 10 hedge funds' portfolios at the end of September. The all time high for this statistics is 13. HIL has seen an increase in hedge fund interest recently. There were 9 hedge funds in our database with HIL holdings at the end of June. Our calculations also showed that HIL isn't among the 30 most popular stocks among hedge funds (click for Q3 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 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Arnaud Ajdler Engine Capital
Arnaud Ajdler Engine Capital

Arnaud Ajdler of Engine Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we're going to take a look at the recent hedge fund action surrounding Hill International Inc (NYSE:HIL).

Do Hedge Funds Think HIL Is A Good Stock To Buy Now?

At third quarter's end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in HIL a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arnaud Ajdler's Engine Capital has the biggest position in Hill International Inc (NYSE:HIL), worth close to $7.3 million, corresponding to 3.7% of its total 13F portfolio. Sitting at the No. 2 spot is Ancora Advisors, managed by Frederick DiSanto, which holds a $5.8 million position; 0.2% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions contain Frederick Tucker Golden's Solas Capital Management, Peter Schliemann's Rutabaga Capital Management and Phillip Goldstein, Andrew Dakos and Steven Samuels's Bulldog Investors. In terms of the portfolio weights assigned to each position Engine Capital allocated the biggest weight to Hill International Inc (NYSE:HIL), around 3.7% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, setting aside 3.47 percent of its 13F equity portfolio to HIL.

Consequently, some big names have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, assembled the most outsized position in Hill International Inc (NYSE:HIL). Citadel Investment Group had $0 million invested in the company at the end of the quarter.

Let's go over hedge fund activity in other stocks similar to Hill International Inc (NYSE:HIL). We will take a look at Evolution Petroleum Corporation (NYSE:EPM), Grindrod Shipping Holdings Ltd. (NASDAQ:GRIN), Mammoth Energy Services, Inc. (NASDAQ:TUSK), Travelzoo (NASDAQ:TZOO), Entasis Therapeutics Holdings Inc. (NASDAQ:ETTX), Cedar Realty Trust Inc (NYSE:CDR), and Epsilon Energy Ltd. (NASDAQ:EPSN). This group of stocks' market caps are similar to HIL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EPM,10,7562,1 GRIN,1,4420,-1 TUSK,7,42065,-2 TZOO,8,7486,-4 ETTX,5,8357,3 CDR,11,4353,-4 EPSN,2,11939,-2 Average,6.3,12312,-1.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.3 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $21 million in HIL's case. Cedar Realty Trust Inc (NYSE:CDR) is the most popular stock in this table. On the other hand Grindrod Shipping Holdings Ltd. (NASDAQ:GRIN) is the least popular one with only 1 bullish hedge fund positions. Hill International Inc (NYSE:HIL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HIL is 74.1. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on HIL as the stock returned 47.7% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.

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