We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Haverty Furniture Companies, Inc. (NYSE:HVT) and determine whether hedge funds skillfully traded this stock.
Hedge fund interest in Haverty Furniture Companies, Inc. (NYSE:HVT) 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 Global Water Resources, Inc. (NASDAQ:GWRS), MarineMax, Inc. (NYSE:HZO), and eGain Corporation (NASDAQ:EGAN) to gather more data points. Our calculations also showed that HVT 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.
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 58 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 36% through May 18th. 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. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. 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. With all of this in mind we’re going to review the recent hedge fund action encompassing Haverty Furniture Companies, Inc. (NYSE:HVT).
How have hedgies been trading Haverty Furniture Companies, Inc. (NYSE:HVT)?
Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HVT over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Haverty Furniture Companies, Inc. (NYSE:HVT), with a stake worth $15.9 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $8.4 million. Arrowstreet Capital, GMT Capital, and Winton Capital Management 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 GMT Capital allocated the biggest weight to Haverty Furniture Companies, Inc. (NYSE:HVT), around 0.17% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.11 percent of its 13F equity portfolio to HVT.
Since Haverty Furniture Companies, Inc. (NYSE:HVT) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedge funds that slashed their positions entirely by the end of the first quarter. It’s worth mentioning that Israel Englander’s Millennium Management dumped the largest position of all the hedgies tracked by Insider Monkey, comprising about $3.5 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dropped its stock, about $0.2 million worth. These moves are important to note, 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 Haverty Furniture Companies, Inc. (NYSE:HVT). We will take a look at Global Water Resources, Inc. (NASDAQ:GWRS), MarineMax, Inc. (NYSE:HZO), eGain Corporation (NASDAQ:EGAN), and CorePoint Lodging Inc. (NYSE:CPLG). All of these stocks’ market caps are closest to HVT’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 8 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $34 million in HVT’s case. MarineMax, Inc. (NYSE:HZO) is the most popular stock in this table. On the other hand Global Water Resources, Inc. (NASDAQ:GWRS) is the least popular one with only 3 bullish hedge fund positions. Haverty Furniture Companies, Inc. (NYSE:HVT) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on HVT as the stock returned 35.7% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.