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Did Hedge Funds Make The Right Call On Hawaiian Holdings, Inc. (HA) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Hawaiian Holdings, Inc. (NASDAQ:HA) and determine whether the smart money was really smart about this stock.

Hawaiian Holdings, Inc. (NASDAQ:HA) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. HA was in 19 hedge funds’ portfolios at the end of March. There were 15 hedge funds in our database with HA positions at the end of the previous quarter. Our calculations also showed that HA 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.

Martin Whitman Third Avenue Management Marty Whitman

Martin Whitman of Third Avenue Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar 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. Keeping this in mind we’re going to review the recent hedge fund action regarding Hawaiian Holdings, Inc. (NASDAQ:HA).

How are hedge funds trading Hawaiian Holdings, Inc. (NASDAQ:HA)?

Heading into the second quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in HA a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Is HA A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Martin Whitman’s Third Avenue Management has the biggest position in Hawaiian Holdings, Inc. (NASDAQ:HA), worth close to $12.7 million, corresponding to 1.9% of its total 13F portfolio. Coming in second is Alden Global Capital, led by Randall Smith, holding a $6.6 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Other peers that hold long positions consist of Lawrence Kam’s Sonic Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Seth Fischer’s Oasis Management. In terms of the portfolio weights assigned to each position Sonic Capital allocated the biggest weight to Hawaiian Holdings, Inc. (NASDAQ:HA), around 4.52% of its 13F portfolio. Oasis Management is also relatively very bullish on the stock, designating 3.43 percent of its 13F equity portfolio to HA.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Alden Global Capital, managed by Randall Smith, assembled the largest position in Hawaiian Holdings, Inc. (NASDAQ:HA). Alden Global Capital had $6.6 million invested in the company at the end of the quarter. Lawrence Kam’s Sonic Capital also made a $5.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Seth Fischer’s Oasis Management, Thomas E. Claugus’s GMT Capital, and Benjamin A. Smith’s Laurion Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to Hawaiian Holdings, Inc. (NASDAQ:HA). We will take a look at Univest Financial Corporation (NASDAQ:UVSP), iHeartMedia, Inc. (NASDAQ:IHRT), SP Plus Corp (NASDAQ:SP), and Camden National Corporation (NASDAQ:CAC). This group of stocks’ market valuations are similar to HA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UVSP 11 55114 -2
IHRT 28 106885 -3
SP 11 65053 -2
CAC 10 43580 -3
Average 15 67658 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $46 million in HA’s case. iHeartMedia, Inc. (NASDAQ:IHRT) is the most popular stock in this table. On the other hand Camden National Corporation (NASDAQ:CAC) is the least popular one with only 10 bullish hedge fund positions. Hawaiian Holdings, Inc. (NASDAQ:HA) 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 HA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HA were disappointed as the stock returned 25.1% 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.