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In this article we will take a look at whether hedge funds think HNI Corp (NYSE:HNI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is HNI a good stock to buy now? HNI Corp (NYSE:HNI) was in 7 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 20. HNI has experienced a decrease in hedge fund interest lately. There were 10 hedge funds in our database with HNI holdings at the end of June. Our calculations also showed that HNI 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.
If you'd ask most market participants, hedge funds are assumed to be worthless, old investment tools of the past. While there are greater than 8000 funds with their doors open at present, Our researchers look at the upper echelon of this club, around 850 funds. These hedge fund managers handle most of the smart money's total asset base, and by keeping an eye on their inimitable stock picks, Insider Monkey has found numerous investment strategies that have historically outpaced Mr. Market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
David E. Shaw of D.E. Shaw
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. Now we're going to take a look at the key hedge fund action encompassing HNI Corp (NYSE:HNI).
What does smart money think about HNI Corp (NYSE:HNI)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -30% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HNI over the last 21 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in HNI Corp (NYSE:HNI). Arrowstreet Capital has a $12 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is D. E. Shaw of D E Shaw, with a $10.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers with similar optimism consist of Cliff Asness's AQR Capital Management, John Overdeck and David Siegel's Two Sigma Advisors and Donald Sussman's Paloma Partners. In terms of the portfolio weights assigned to each position Arrowstreet Capital allocated the biggest weight to HNI Corp (NYSE:HNI), around 0.02% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to HNI.
Seeing as HNI Corp (NYSE:HNI) has experienced declining sentiment from hedge fund managers, it's safe to say that there was a specific group of fund managers who were dropping their positions entirely last quarter. Interestingly, Ken Griffin's Citadel Investment Group cut the biggest position of all the hedgies monitored by Insider Monkey, comprising close to $3.7 million in stock, and Roger Ibbotson's Zebra Capital Management was right behind this move, as the fund dropped about $0.5 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 3 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to HNI Corp (NYSE:HNI). We will take a look at Bloomin' Brands Inc (NASDAQ:BLMN), Park National Corporation (NYSE:PRK), Gentherm Inc (NASDAQ:THRM), American Woodmark Corporation (NASDAQ:AMWD), BancFirst Corporation (NASDAQ:BANF), Sirius International Insurance Group, Ltd. (NASDAQ:SG), and Gray Television, Inc. (NYSE:GTN). All of these stocks' market caps match HNI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BLMN,30,284019,7 PRK,2,1867,-10 THRM,10,78230,-3 AMWD,15,42220,-1 BANF,4,3383,-9 SG,6,8559,4 GTN,25,114310,-1 Average,13.1,76084,-1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.1 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $32 million in HNI's case. Bloomin' Brands Inc (NASDAQ:BLMN) is the most popular stock in this table. On the other hand Park National Corporation (NYSE:PRK) is the least popular one with only 2 bullish hedge fund positions. HNI Corp (NYSE:HNI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HNI is 21.4. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on HNI as the stock returned 20.2% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.