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 thoughtHill International Inc (NYSE:HIL) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Hill International Inc (NYSE:HIL) investors should be aware of a decrease in hedge fund sentiment recently. HIL was in 10 hedge funds' portfolios at the end of the first quarter of 2020. There were 13 hedge funds in our database with HIL holdings at the end of the previous quarter. Our calculations also showed that HIL 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.
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. Keeping this in mind we're going to take a peek at the key hedge fund action encompassing Hill International Inc (NYSE:HIL).
How have hedgies been trading Hill International Inc (NYSE:HIL)?
At Q1's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HIL over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Engine Capital held the most valuable stake in Hill International Inc (NYSE:HIL), which was worth $11.2 million at the end of the third quarter. On the second spot was Ancora Advisors which amassed $6.6 million worth of shares. Solas Capital Management, Rutabaga Capital Management, and Bulldog Investors 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 Engine Capital allocated the biggest weight to Hill International Inc (NYSE:HIL), around 5.84% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, setting aside 3.38 percent of its 13F equity portfolio to HIL.
Judging by the fact that Hill International Inc (NYSE:HIL) has experienced falling interest from the aggregate hedge fund industry, it's easy to see that there is a sect of hedgies who sold off their positions entirely heading into Q4. Intriguingly, Bradley Louis Radoff's Fondren Management cut the biggest position of the "upper crust" of funds monitored by Insider Monkey, valued at close to $0.6 million in stock, and David Nguyen and Nancy Oh's One68 Global Capital was right behind this move, as the fund sold off about $0.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 3 funds heading into Q4.
Let's go over hedge fund activity in other stocks similar to Hill International Inc (NYSE:HIL). We will take a look at Manitex International, Inc. (NASDAQ:MNTX), IDEAYA Biosciences, Inc. (NASDAQ:IDYA), HireQuest, Inc. (NASDAQ:HQI), and Tanzanian Gold Corporation (NYSE:TRX). This group of stocks' market caps match HIL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MNTX,7,7980,1 IDYA,6,12292,-3 HQI,2,711,0 TRX,1,15,0 Average,4,5250,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $26 million in HIL's case. Manitex International, Inc. (NASDAQ:MNTX) is the most popular stock in this table. On the other hand Tanzanian Gold Corporation (NYSE:TRX) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Hill International Inc (NYSE:HIL) is more popular among hedge funds. 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 still beat the market by 15.5 percentage points. Unfortunately HIL wasn't nearly as popular as these 10 stocks and hedge funds that were betting on HIL were disappointed as the stock returned 4.8% 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.