Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: HD Supply Holdings Inc (NASDAQ:HDS).
HD Supply Holdings Inc (NASDAQ:HDS) investors should pay attention to an increase in hedge fund interest recently. Our calculations also showed that HDS isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are dozens of indicators investors have at their disposal to value stocks. Two of the most underrated indicators are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace the market by a healthy margin (see the details here).
We’re going to analyze the fresh hedge fund action regarding HD Supply Holdings Inc (NASDAQ:HDS).
What does the smart money think about HD Supply Holdings Inc (NASDAQ:HDS)?
At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the second quarter of 2018. By comparison, 42 hedge funds held shares or bullish call options in HDS heading into this year. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, JANA Partners held the most valuable stake in HD Supply Holdings Inc (NASDAQ:HDS), which was worth $257.5 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $174.4 million worth of shares. Moreover, Citadel Investment Group, OZ Management, and Iridian Asset Management were also bullish on HD Supply Holdings Inc (NASDAQ:HDS), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, some big names were breaking ground themselves. Wexford Capital, managed by Charles Davidson and Joseph Jacobs, initiated the largest position in HD Supply Holdings Inc (NASDAQ:HDS). Wexford Capital had $3.3 million invested in the company at the end of the quarter. Nick Niell’s Arrowgrass Capital Partners also made a $3.2 million investment in the stock during the quarter. The other funds with brand new HDS positions are George Zweig, Shane Haas and Ravi Chander’s Signition LP, Thomas Bailard’s Bailard Inc, and Bruce Kovner’s Caxton Associates LP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as HD Supply Holdings Inc (NASDAQ:HDS) but similarly valued. These stocks are ON Semiconductor Corporation (NASDAQ:ON), MGM Growth Properties LLC (NYSE:MGP), Macerich Company (NYSE:MAC), and Brookfield Property Partners LP (NASDAQ:BPY). This group of stocks’ market values are similar to HDS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ON | 27 | 336908 | 2 |
| MGP | 15 | 222330 | 1 |
| MAC | 30 | 409391 | -8 |
| BPY | 11 | 136100 | 8 |
| Average | 20.75 | 276182 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $276 million. That figure was $1.43 billion in HDS’s case. The Macerich Company (NYSE:MAC) is the most popular stock in this table. On the other hand Brookfield Property Partners LP (NASDAQ:BPY) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks HD Supply Holdings Inc (NASDAQ:HDS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
