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First Hawaiian, Inc. (FHB): Hedge Funds Are Nibbling

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 First Hawaiian, Inc. (NASDAQ:FHB).

First Hawaiian, Inc. (NASDAQ:FHB) investors should be aware of an increase in enthusiasm from smart money recently. FHB was in 21 hedge funds’ portfolios at the end of March. There were 18 hedge funds in our database with FHB holdings at the end of the previous quarter. Our calculations also showed that FHB 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 eyes of most market participants, hedge funds are perceived as worthless, old financial tools of yesteryear. While there are greater than 8000 funds trading today, Our experts choose to focus on the moguls of this group, approximately 850 funds. These money managers handle bulk of all hedge funds’ total asset base, and by tracking their best stock picks, Insider Monkey has found various investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Donald Yacktman of Yacktman Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s view the recent hedge fund action surrounding First Hawaiian, Inc. (NASDAQ:FHB).

How are hedge funds trading First Hawaiian, Inc. (NASDAQ:FHB)?

Heading into the second quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FHB over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in First Hawaiian, Inc. (NASDAQ:FHB) was held by Yacktman Asset Management, which reported holding $46.9 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $19.6 million position. Other investors bullish on the company included D E Shaw, AQR Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Yacktman Asset Management allocated the biggest weight to First Hawaiian, Inc. (NASDAQ:FHB), around 0.78% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, setting aside 0.24 percent of its 13F equity portfolio to FHB.

As aggregate interest increased, specific money managers have been driving this bullishness. Yacktman Asset Management, managed by Donald Yacktman, established the largest position in First Hawaiian, Inc. (NASDAQ:FHB). Yacktman Asset Management had $46.9 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $2.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Minhua Zhang’s Weld Capital Management, and Jinghua Yan’s TwinBeech Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as First Hawaiian, Inc. (NASDAQ:FHB) but similarly valued. These stocks are Gates Industrial Corporation plc (NYSE:GTES), CenterState Bank Corporation (NASDAQ:CSFL), CarGurus, Inc. (NASDAQ:CARG), and WNS (Holdings) Limited (NYSE:WNS). This group of stocks’ market values are similar to FHB’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GTES 8 23102 -1
CSFL 14 48481 -2
CARG 26 485392 -7
WNS 17 184501 -3
Average 16.25 185369 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $185 million. That figure was $137 million in FHB’s case. CarGurus, Inc. (NASDAQ:CARG) is the most popular stock in this table. On the other hand Gates Industrial Corporation plc (NYSE:GTES) is the least popular one with only 8 bullish hedge fund positions. First Hawaiian, Inc. (NASDAQ:FHB) 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 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately FHB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FHB were disappointed as the stock returned 9.1% 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.