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Did Hedge Funds Make The Right Call On Hancock Whitney Corporation (HWC) ?

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). 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 Hancock Whitney Corporation (NASDAQ:HWC) at the end of the first quarter and determine whether the smart money was really smart about this stock.

Hancock Whitney Corporation (NASDAQ:HWC) has experienced an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that HWC isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

TUDOR INVESTMENT CORP

Paul Tudor Jones of Tudor Investment Corp

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to take a glance at the key hedge fund action regarding Hancock Whitney Corporation (NASDAQ:HWC).

What does smart money think about Hancock Whitney Corporation (NASDAQ:HWC)?

At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the fourth quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in HWC a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Daniel Johnson’s Gillson Capital has the most valuable position in Hancock Whitney Corporation (NASDAQ:HWC), worth close to $9.7 million, accounting for 1.6% of its total 13F portfolio. On Gillson Capital’s heels is Mark Lee of Forest Hill Capital, with a $7.1 million position; 3.8% of its 13F portfolio is allocated to the company. Some other peers that are bullish comprise Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Forest Hill Capital allocated the biggest weight to Hancock Whitney Corporation (NASDAQ:HWC), around 3.81% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, designating 1.64 percent of its 13F equity portfolio to HWC.

As industrywide interest jumped, some big names were breaking ground themselves. Renaissance Technologies, initiated the largest position in Hancock Whitney Corporation (NASDAQ:HWC). Renaissance Technologies had $1.9 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1.1 million investment in the stock during the quarter. The following funds were also among the new HWC investors: John Overdeck and David Siegel’s Two Sigma Advisors, Dmitry Balyasny’s Balyasny Asset Management, and Greg Eisner’s Engineers Gate Manager.

Let’s go over hedge fund activity in other stocks similar to Hancock Whitney Corporation (NASDAQ:HWC). We will take a look at Atlantic Union Bankshares Corporation (NASDAQ:AUB), Cimarex Energy Co (NYSE:XEC), American Equity Investment Life Holding Company (NYSE:AEL), and Innospec Inc. (NASDAQ:IOSP). This group of stocks’ market values are closest to HWC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AUB 10 14509 2
XEC 35 398770 2
AEL 12 43458 -5
IOSP 14 70798 -4
Average 17.75 131884 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $40 million in HWC’s case. Cimarex Energy Co (NYSE:XEC) is the most popular stock in this table. On the other hand Atlantic Union Bankshares Corporation (NASDAQ:AUB) is the least popular one with only 10 bullish hedge fund positions. Hancock Whitney Corporation (NASDAQ:HWC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 18.6% in 2020 through July 27th but beat the market by 17.1 percentage points. Unfortunately HWC wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HWC were disappointed as the stock returned -2.4% during the same time period 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 many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.