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Hawaiian Holdings, Inc. (HA): Hedge Fund Sentiment At Rock Bottom?

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 gone over 730 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 June 28th. In this article we look at what those investors think of Hawaiian Holdings, Inc. (NASDAQ:HA).

Is Hawaiian Holdings, Inc. (NASDAQ:HA) a superb stock to buy now? Prominent investors are becoming less confident. The number of bullish hedge fund bets were cut by 3 lately. Our calculations also showed that HA isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Martin Whitman Third Avenue Management Marty Whitman

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a glance at the fresh hedge fund action surrounding Hawaiian Holdings, Inc. (NASDAQ:HA).

Hedge fund activity in Hawaiian Holdings, Inc. (NASDAQ:HA)

At Q2’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in HA over the last 16 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

No of Hedge Funds with HA Positions

Among these funds, Third Avenue Management held the most valuable stake in Hawaiian Holdings, Inc. (NASDAQ:HA), which was worth $38.8 million at the end of the second quarter. On the second spot was Royce & Associates which amassed $20.9 million worth of shares. Moreover, Buckingham Capital Management, Millennium Management, and Two Sigma Advisors were also bullish on Hawaiian Holdings, Inc. (NASDAQ:HA), allocating a large percentage of their portfolios to this stock.

Since Hawaiian Holdings, Inc. (NASDAQ:HA) has experienced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedge funds that elected to cut their positions entirely by the end of the second quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest position of the 750 funds tracked by Insider Monkey, totaling about $4.5 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $3.1 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 3 funds by the end of the second quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Hawaiian Holdings, Inc. (NASDAQ:HA) but similarly valued. We will take a look at Noble Midstream Partners LP (NYSE:NBLX), Aimmune Therapeutics Inc (NASDAQ:AIMT), EnPro Industries, Inc. (NYSE:NPO), and Fresh Del Monte Produce Inc (NYSE:FDP). This group of stocks’ market caps are closest to HA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NBLX 4 5889 0
AIMT 13 182284 -2
NPO 11 122535 -6
FDP 11 42120 -3
Average 9.75 88207 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $94 million in HA’s case. Aimmune Therapeutics Inc (NASDAQ:AIMT) is the most popular stock in this table. On the other hand Noble Midstream Partners LP (NYSE:NBLX) is the least popular one with only 4 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on HA were disappointed as the stock returned -3.8% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

Disclosure: None. This article was originally published at Insider Monkey.

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