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After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards HomeStreet Inc (NASDAQ:HMST).
HomeStreet Inc (NASDAQ:HMST) has experienced a decrease in activity from the world's largest hedge funds in recent months. HomeStreet Inc (NASDAQ:HMST) was in 11 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. There were 13 hedge funds in our database with HMST positions at the end of the second quarter. Our calculations also showed that HMST 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If you'd ask most market participants, hedge funds are viewed as underperforming, outdated financial tools of years past. While there are greater than 8000 funds with their doors open at the moment, We choose to focus on the bigwigs of this club, approximately 850 funds. These investment experts handle the majority of the hedge fund industry's total asset base, and by tailing their finest investments, Insider Monkey has revealed many investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy outperformed 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 .
Fred Cummings of Elizabeth Park 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. Keeping this in mind we're going to take a look at the key hedge fund action encompassing HomeStreet Inc (NASDAQ:HMST).
Do Hedge Funds Think HMST Is A Good Stock To Buy Now?
At Q3's end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in HMST over the last 21 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of HomeStreet Inc (NASDAQ:HMST), with a stake worth $10 million reported as of the end of September. Trailing Renaissance Technologies was Elizabeth Park Capital Management, which amassed a stake valued at $8.1 million. Arrowstreet Capital, D E Shaw, and Winton Capital Management 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 Elizabeth Park Capital Management allocated the biggest weight to HomeStreet Inc (NASDAQ:HMST), around 5.32% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to HMST.
Seeing as HomeStreet Inc (NASDAQ:HMST) has experienced falling interest from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds that slashed their entire stakes last quarter. Interestingly, Ken Griffin's Citadel Investment Group sold off the largest position of the 750 funds followed by Insider Monkey, totaling an estimated $1.4 million in stock. Gregg Moskowitz's fund, Interval Partners, also dumped its stock, about $0.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as HomeStreet Inc (NASDAQ:HMST) but similarly valued. These stocks are Qutoutiao Inc. (NASDAQ:QTT), First Foundation Inc (NASDAQ:FFWM), El Pollo LoCo Holdings Inc (NASDAQ:LOCO), Premier Financial Corp. (NASDAQ:PFC), America's Car-Mart, Inc. (NASDAQ:CRMT), Cass Information Systems, Inc. (NASDAQ:CASS), and Celldex Therapeutics, Inc. (NASDAQ:CLDX). This group of stocks' market values are similar to HMST's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QTT,5,1760,0 FFWM,17,50800,3 LOCO,8,28594,-2 PFC,13,46734,3 CRMT,9,63653,-5 CASS,5,11771,-4 CLDX,23,292439,1 Average,11.4,70822,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $34 million in HMST's case. Celldex Therapeutics, Inc. (NASDAQ:CLDX) is the most popular stock in this table. On the other hand Qutoutiao Inc. (NASDAQ:QTT) is the least popular one with only 5 bullish hedge fund positions. HomeStreet Inc (NASDAQ:HMST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HMST is 40.3. 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. A small number of hedge funds were also right about betting on HMST as the stock returned 32.2% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.