Hedge Funds Are Dumping Home Bancshares Inc (HOMB)

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Home Bancshares Inc (NASDAQ:HOMB) was in 9 hedge funds’ portfolios at the end of September. HOMB investors should pay attention to a decrease in hedge fund interest recently. There were 13 hedge funds in our database with HOMB positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Convergys Corporation (NYSE:CVG), Horizon Pharma Inc (NASDAQ:HZNP), and Papa John’s Int’l, Inc. (NASDAQ:PZZA) to gather more data points.

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.

Hedge fund activity in Home Bancshares Inc (NASDAQ:HOMB)

At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a fall of 31% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards HOMB over the last 5 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Alex Lieblong of Key Colony Management holds the most valuable position in Home Bancshares Inc (NASDAQ:HOMB). Key Colony Management has a $23.4 million position in the stock, comprising 28.1% of its 13F portfolio. Sitting at the No. 2 spot is Charles Paquelet of Skylands Capital holding a $2.4 million position. Some other members of the smart money with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Drew Cupps’ Cupps Capital Management and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Because Home Bancshares Inc (NASDAQ:HOMB) has encountered falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds who sold off their entire stakes last quarter. It’s worth mentioning that Mark Lee’s Forest Hill Capital sold off the largest stake of the 700 funds followed by Insider Monkey, worth about $22 million in stock, and Anton Schutz’s Mendon Capital Advisors was right behind this move, as the fund dumped about $2 million worth of shares.

Let’s go over hedge fund activity in other stocks similar to Home Bancshares Inc (NASDAQ:HOMB). We will take a look at Convergys Corporation (NYSE:CVG), Horizon Pharma Inc (NASDAQ:HZNP), Papa John’s Int’l, Inc. (NASDAQ:PZZA), and Colony Starwood Homes(NYSE:SFR). This group of stocks’ market caps are closest to HOMB’s market cap.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $299 million. That figure was $32 million in HOMB’s case. Horizon Pharma Inc (NASDAQ:HZNP) is the most popular stock in this table. On the other hand Colony Starwood Homes(NYSE:SFR) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Home Bancshares Inc (NASDAQ:HOMB) is even less popular than SFR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None