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HollyFrontier Corp (HFC): Does Hedge Fund Sentiment Point to a Coming Rebound?

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Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility and underperformance. The time period between the end of June 2015 and the end of June 2016 was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have been underperforming the large-cap indices. However, things have dramatically changed over the last 5 months. Small-cap stocks reversed their misfortune and beat the large cap indices by almost 11 percentage points since the end of June. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of HollyFrontier Corp (NYSE:HFC).

HollyFrontier Corp (NYSE:HFC) has seen an increase in hedge fund interest of late. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Store Capital Corp (NYSE:STOR), BOK Financial Corporation (NASDAQ:BOKF), and Life Storage Inc (NYSE:LSI) to gather more data points.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What does the smart money think about HollyFrontier Corp (NYSE:HFC)?

Heading into the fourth quarter of 2016, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 32% burst from the previous quarter. Nonetheless, there are still 15 fewer hedgies owning the stock on September 30 as there were a year earlier. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

HedgeFundSentimentChart

When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the biggest position in HollyFrontier Corp (NYSE:HFC). Millennium Management has a $40.4 million position in the stock. Sitting at the No. 2 spot is Steve Cohen of Point72 Asset Management, with a $31 million position. Some other hedge funds and institutional investors that hold long positions consist of Cliff Asness’ AQR Capital Management, Anand Parekh’s Alyeska Investment Group and Jonathan Barrett and Paul Segal’s Luminus Management.

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