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Do Hedge Funds Love Hanger, Inc. (HNGR)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Hanger, Inc. (NYSE:HNGR).

Hedge fund interest in Hanger, Inc. (NYSE:HNGR) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Cerence Inc. (NASDAQ:CRNC), Quotient Technology Inc (NYSE:QUOT), and SMART Global Holdings, Inc. (NASDAQ:SGH) to gather more data points. Our calculations also showed that HNGR 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.

Carlo Cannell

J. Carlo Cannell of Cannell Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the new hedge fund action surrounding Hanger, Inc. (NYSE:HNGR).

What have hedge funds been doing with Hanger, Inc. (NYSE:HNGR)?

At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in HNGR a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John R. Wagner’s SCW Capital Management has the biggest position in Hanger, Inc. (NYSE:HNGR), worth close to $21.6 million, amounting to 19.3% of its total 13F portfolio. The second most bullish fund manager is J. Carlo Cannell of Cannell Capital, with a $9.8 million position; 4.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish comprise Renaissance Technologies, John W. Rogers’s Ariel Investments and Joe Huber’s Huber Capital Management. In terms of the portfolio weights assigned to each position SCW Capital Management allocated the biggest weight to Hanger, Inc. (NYSE:HNGR), around 19.3% of its 13F portfolio. Cannell Capital is also relatively very bullish on the stock, earmarking 4.08 percent of its 13F equity portfolio to HNGR.

Seeing as Hanger, Inc. (NYSE:HNGR) has witnessed bearish sentiment from the smart money, logic holds that there was a specific group of funds that elected to cut their positions entirely heading into Q4. At the top of the heap, Ken Griffin’s Citadel Investment Group dropped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $1.4 million in stock. Harry Gail’s fund, Harspring Capital Management, also dumped its stock, about $0.9 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to Hanger, Inc. (NYSE:HNGR). These stocks are Cerence Inc. (NASDAQ:CRNC), Quotient Technology Inc (NYSE:QUOT), SMART Global Holdings, Inc. (NASDAQ:SGH), and Linx S.A. (NYSE:LINX). This group of stocks’ market values match HNGR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CRNC 11 66375 -11
QUOT 18 242478 3
SGH 17 264406 -1
LINX 5 11501 1
Average 12.75 146190 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $146 million. That figure was $51 million in HNGR’s case. Quotient Technology Inc (NYSE:QUOT) is the most popular stock in this table. On the other hand Linx S.A. (NYSE:LINX) is the least popular one with only 5 bullish hedge fund positions. Hanger, Inc. (NYSE:HNGR) 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately HNGR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HNGR were disappointed as the stock returned 5.2% 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.