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Do Hedge Funds Love HNI Corp (HNI)?

The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded HNI Corp (NYSE:HNI) based on those filings.

HNI Corp (NYSE:HNI) has seen an increase in hedge fund interest in recent months. At the end of this article we will also compare HNI to other stocks including Party City Holdco Inc (NYSE:PRTY), KLX Inc (NASDAQ:KLXI), and FleetMatics Group PLC (NYSE:FLTX) to get a better sense of its popularity.

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To most market participants, hedge funds are viewed as slow, outdated financial tools of yesteryear. While there are more than an 8000 funds in operation at the moment, Our researchers choose to focus on the moguls of this group, about 700 funds. These investment experts watch over the majority of all hedge funds’ total asset base, and by keeping track of their inimitable picks, Insider Monkey has unearthed various investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, let’s take a glance at the recent action regarding HNI Corp (NYSE:HNI).

Hedge fund activity in HNI Corp (NYSE:HNI)

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, holds the most valuable position in HNI Corp (NYSE:HNI). First Pacific Advisors LLC has a $21.8 million position in the stock, comprising 0.2% of its 13F portfolio. On First Pacific Advisors LLC’s heels is Royce & Associates, led by Chuck Royce, holding a $18.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish comprise Jim Simons’s Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Cliff Asness’s AQR Capital Management.

As aggregate interest increased, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the most outsized position in HNI Corp (NYSE:HNI). Millennium Management had $2.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.5 million position during the quarter. The only other fund with a new position in the stock is D. E. Shaw’s D E Shaw.

Let’s also examine hedge fund activity in other stocks similar to HNI Corp (NYSE:HNI). These stocks are Party City Holdco Inc (NYSE:PRTY), KLX Inc (NASDAQ:KLXI), FleetMatics Group PLC (NYSE:FLTX), and Teekay LNG Partners L.P. (NYSE:TGP). All of these stocks’ market caps resemble HNI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PRTY 12 82573 -6
KLXI 34 692485 -2
FLTX 13 68660 1
TGP 7 13512 1

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $214 million. That figure was $61 million in HNI’s case. KLX Inc (NASDAQ:KLXI) is the most popular stock in this table. On the other hand Teekay LNG Partners L.P. (NYSE:TGP) is the least popular one with only 7 bullish hedge fund positions. HNI Corp (NYSE:HNI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KLXI might be a better candidate to consider a long position.

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