H&E Equipment Services, Inc. (HEES): Hedge Funds Are Snapping Up

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of H&E Equipment Services, Inc. (NASDAQ:HEES) based on that data.

Is H&E Equipment Services, Inc. (NASDAQ:HEES) ready to rally soon? Money managers are getting more bullish. The number of bullish hedge fund positions increased by 1 in recent months. Our calculations also showed that HEES 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.

At the moment there are a lot of metrics investors can use to analyze stocks. A couple of the most underrated metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass the S&P 500 by a very impressive amount (see the details here).

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. With all of this in mind let’s take a glance at the fresh hedge fund action surrounding H&E Equipment Services, Inc. (NASDAQ:HEES).

What does smart money think about H&E Equipment Services, Inc. (NASDAQ:HEES)?

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in HEES over the last 18 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Is HEES A Good Stock To Buy?

More specifically, Adage Capital Management was the largest shareholder of H&E Equipment Services, Inc. (NASDAQ:HEES), with a stake worth $17.8 million reported as of the end of September. Trailing Adage Capital Management was Arrowstreet Capital, which amassed a stake valued at $4.4 million. Marshall Wace LLP, Citadel Investment Group, and Two Sigma Advisors 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 Algert Coldiron Investors allocated the biggest weight to H&E Equipment Services, Inc. (NASDAQ:HEES), around 0.62% of its 13F portfolio. Ellington is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to HEES.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into H&E Equipment Services, Inc. (NASDAQ:HEES) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, assembled the most outsized position in H&E Equipment Services, Inc. (NASDAQ:HEES). Adage Capital Management had $17.8 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $1.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Mike Vranos’s Ellington, and Mario Gabelli’s GAMCO Investors.

Let’s go over hedge fund activity in other stocks similar to H&E Equipment Services, Inc. (NASDAQ:HEES). These stocks are HomeStreet Inc (NASDAQ:HMST), i3 Verticals, Inc. (NASDAQ:IIIV), Rattler Midstream LP (NASDAQ:RTLR), and TrustCo Bank Corp NY (NASDAQ:TRST). This group of stocks’ market values are closest to HEES’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HMST 13 38232 -2
IIIV 11 41532 -1
RTLR 9 43773 1
TRST 11 30498 -3
Average 11 38509 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $40 million in HEES’s case. HomeStreet Inc (NASDAQ:HMST) is the most popular stock in this table. On the other hand Rattler Midstream LP (NASDAQ:RTLR) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks H&E Equipment Services, Inc. (NASDAQ:HEES) is more popular among hedge funds. 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 and still beat the market by 16.8 percentage points. Unfortunately HEES wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HEES were disappointed as the stock returned 19.7% during the second quarter (through June 25th) 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 most of these stocks already outperformed the market in 2020.

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