At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Bank of Hawaii Corporation (NYSE:BOH) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Bank of Hawaii Corporation (NYSE:BOH) has experienced an increase in activity from the world’s largest hedge funds lately. Bank of Hawaii Corporation (NYSE:BOH) was in 18 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BOH isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 56 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 34% through August 17th. 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. 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 are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we’re going to analyze the latest hedge fund action regarding Bank of Hawaii Corporation (NYSE:BOH).
What have hedge funds been doing with Bank of Hawaii Corporation (NYSE:BOH)?
At the end of the second quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BOH over the last 20 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Bank of Hawaii Corporation (NYSE:BOH), with a stake worth $26.8 million reported as of the end of September. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $11.1 million. Royce & Associates, AQR Capital Management, and GLG Partners 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 Winton Capital Management allocated the biggest weight to Bank of Hawaii Corporation (NYSE:BOH), around 0.1% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.08 percent of its 13F equity portfolio to BOH.
Consequently, key hedge funds have jumped into Bank of Hawaii Corporation (NYSE:BOH) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the largest position in Bank of Hawaii Corporation (NYSE:BOH). Marshall Wace LLP had $2.2 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $0.8 million position during the quarter. The following funds were also among the new BOH investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors and Karim Abbadi and Edward McBride’s Centiva Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Bank of Hawaii Corporation (NYSE:BOH). These stocks are Option Care Health, Inc. (NASDAQ:OPCH), Premier Inc (NASDAQ:PINC), Valmont Industries, Inc. (NYSE:VMI), National Vision Holdings, Inc. (NASDAQ:EYE), Avista Corp (NYSE:AVA), Tegna Inc (NYSE:TGNA), and Brady Corp (NYSE:BRC). All of these stocks’ market caps match BOH’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $190 million. That figure was $76 million in BOH’s case. Tegna Inc (NYSE:TGNA) is the most popular stock in this table. On the other hand Option Care Health, Inc. (NASDAQ:OPCH) is the least popular one with only 11 bullish hedge fund positions. Bank of Hawaii Corporation (NYSE:BOH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BOH is 55.4. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately BOH wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BOH investors were disappointed as the stock returned -16.8% in the third 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.
Disclosure: None. This article was originally published at Insider Monkey.