We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Horace Mann Educators Corporation (NYSE:HMN), and what that likely means for the prospects of the company and its stock.
Horace Mann Educators Corporation (NYSE:HMN) investors should pay attention to a decrease in hedge fund interest in recent months. There were 11 funds in our database with HMN positions at the end of the third quarter. 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 Park National Corporation (NYSEAMEX:PRK), Crestwood Equity Partners LP (NYSE:CEQP), and Infoblox Inc (NYSE:BLOX) to gather more data points.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
Keeping this in mind, we’re going to review the new action surrounding Horace Mann Educators Corporation (NYSE:HMN).
How are hedge funds trading Horace Mann Educators Corporation (NYSE:HMN)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of down by 15% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in HMN over the last five quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, John W. Rogers’s Ariel Investments has the number one position in Horace Mann Educators Corporation (NYSE:HMN), worth close to $13.4 million, comprising 0.2% of its total 13F portfolio. On Ariel Investments’s heels is AQR Capital Management, led by Cliff Asness, holding a $6.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish contain Ken Griffin’s Citadel Investment Group, Millennium Management, one of the 10 largest hedge funds in the world and Jim Simons’ Renaissance Technologies. We should note that none of these hedge funds are 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.