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Is Harmonic Inc (HLIT) Going to Burn These Hedge Funds?

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The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Harmonic Inc (NASDAQ:HLIT) from the perspective of those successful funds.

Harmonic Inc (NASDAQ:HLIT) was in 9 hedge funds’ portfolios at the end of September. HLIT has seen an increase in hedge fund interest recently. There were 8 hedge funds in our database with HLIT holdings at the end of the previous quarter. At the end of this article we will also compare HLIT to other stocks including Sierra Wireless, Inc. (USA) (NASDAQ:SWIR), Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH), and Cascade Bancorp (NASDAQ:CACB) to get a better sense of its popularity.

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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Hedge fund activity in Harmonic Inc (NASDAQ:HLIT)

At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, up by 13% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in HLIT over the last 5 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

HedgeFundSentimentChart

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Robert G. Moses of RGM Capital holds the number one position in Harmonic Inc (NASDAQ:HLIT). RGM Capital has a $42.5 million position in the stock, comprising 4.8% of its 13F portfolio. The second most bullish fund manager is Chuck Royce of Royce & Associates which holds a $11.2 million position. Some other professional money managers that hold long positions contain Jim Simons’ Renaissance Technologies, one of the largest hedge funds in the world, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and D. E. Shaw’s D E Shaw. We should note that RGM Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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