Hedge Fund Ownership of Hawaiian Holdings, Inc. (HA) Beginning to Take Off

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Hawaiian Holdings, Inc. (NASDAQ:HA).

Is Hawaiian Holdings, Inc. (NASDAQ:HA) a bargain? Hedge funds are becoming more confident. The number of long hedge fund positions increased by 2 recently. HA was in 24 hedge funds’ portfolios at the end of the third quarter of 2016. There were 22 hedge funds in our database with HA holdings at the end of the previous quarter. At the end of this article we will also compare HA to other stocks including Essent Group Ltd (NYSE:ESNT), Suburban Propane Partners LP (NYSE:SPH), and Electronics For Imaging, Inc. (NASDAQ:EFII) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What have hedge funds been doing with Hawaiian Holdings, Inc. (NASDAQ:HA)?

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a 9% jump from one quarter earlier. As shown on the chart below, hedge fund ownership is taking off to new heights in a nice smooth trajectory over the past 2 quarters, though the ownership range remains narrow. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies, managed by Jim Simons, holds the number one position in Hawaiian Holdings, Inc. (NASDAQ:HA). Renaissance Technologies has a $112.3 million position in the stock. On Renaissance Technologies’s heels is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $27.6 million position. Other peers that are bullish encompass Robert Polak’s Anchor Bolt Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP and John Tompkins’ Tyvor Capital.

With general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Folger Hill Asset Management, managed by Solomon Kumin, created the biggest position in Hawaiian Holdings, Inc. (NASDAQ:HA). Folger Hill Asset Management had $3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $2.7 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Ray Carroll’s Breton Hill Capital, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.

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. These stocks are Essent Group Ltd (NYSE:ESNT), Suburban Propane Partners LP (NYSE:SPH), Electronics For Imaging, Inc. (NASDAQ:EFII), and MGIC Investment Corp. (NYSE:MTG). This group of stocks’ market values match HA’s market value.

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 $205 million. That figure was $226 million in HA’s case. MGIC Investment Corp. (NYSE:MTG) is the most popular stock in this table. On the other hand Suburban Propane Partners LP (NYSE:SPH) 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. In this regard MTG might be a better candidate to consider a long position in (though favor for that stock dipped heavily in Q3, it still has far more hedge fund shareholders).

Disclosure: None