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Hedge Funds Are Dumping Haemonetics Corporation (HAE)

Is Haemonetics Corporation (NYSE:HAE) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Haemonetics Corporation (NYSE:HAE) undervalued? Hedge funds are reducing their bets on the stock. The number of bullish hedge fund bets decreased by 2 in recent months. Our calculations also showed that HAE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ricky Sandler of Eminence Capital

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to analyze the recent hedge fund action surrounding Haemonetics Corporation (NYSE:HAE).

How have hedgies been trading Haemonetics Corporation (NYSE:HAE)?

Heading into the fourth quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HAE over the last 17 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Haemonetics Corporation (NYSE:HAE), which was worth $331.4 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $37.7 million worth of shares. Eminence Capital, Nitorum Capital, and Fisher Asset Management 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 Nitorum Capital allocated the biggest weight to Haemonetics Corporation (NYSE:HAE), around 2.05% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, setting aside 1.22 percent of its 13F equity portfolio to HAE.

Judging by the fact that Haemonetics Corporation (NYSE:HAE) has faced falling interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that slashed their entire stakes last quarter. Interestingly, Steve Cohen’s Point72 Asset Management dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $40.9 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace, also said goodbye to its stock, about $18.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Haemonetics Corporation (NYSE:HAE) but similarly valued. We will take a look at Entegris Inc (NASDAQ:ENTG), Pentair plc (NYSE:PNR), Buckeye Partners, L.P. (NYSE:BPL), and Elastic N.V. (NYSE:ESTC). All of these stocks’ market caps are closest to HAE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ENTG 26 807428 2
PNR 22 415842 1
BPL 18 536490 5
ESTC 30 867426 3
Average 24 656797 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $657 million. That figure was $601 million in HAE’s case. Elastic N.V. (NYSE:ESTC) is the most popular stock in this table. On the other hand Buckeye Partners, L.P. (NYSE:BPL) is the least popular one with only 18 bullish hedge fund positions. Haemonetics Corporation (NYSE:HAE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately HAE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HAE investors were disappointed as the stock returned -4.4% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.

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

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