Hedge Funds Are Fans of Hooker Furniture Corporation (HOFT)

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Hooker Furniture Corporation (NASDAQ:HOFT) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of the third quarter of 2016, same as at the end of Q2. 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 Oxford Immunotec Global PLC (NASDAQ:OXFD), Community Healthcare Trust Inc (NYSE:CHCT), and InVitae Corp (NYSE:NVTA) 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.

What have hedge funds been doing with Hooker Furniture Corporation (NASDAQ:HOFT)?

At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards HOFT over the last 5 quarters, which has remained nearly unchanged. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce of Royce & Associates holds the biggest position in Hooker Furniture Corporation (NASDAQ:HOFT), valued at $40.8 million in stock. Sitting at the No. 2 spot is Stephen Feinberg’s Cerberus Capital Management, which holds a $13.7 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish contain Renaissance Technologies, one of the largest hedge funds in the world, Cliff Asness’ AQR Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. 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.

We view hedge fund activity in the stock as unfavorable, but in this case there was only a single hedge fund selling its entire position: Highbridge Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 700+ hedge funds tracked by Insider Monkey identified it as a viable investment and initiated a position in the stock (that fund was Millennium Management).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Hooker Furniture Corporation (NASDAQ:HOFT) but similarly valued. We will take a look at Oxford Immunotec Global PLC (NASDAQ:OXFD), Community Healthcare Trust Inc (NYSE:CHCT), InVitae Corp (NYSE:NVTA), and First Connecticut Bancorp Inc (NASDAQ:FBNK). This group of stocks’ market values match HOFT’s market value.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $68 million in HOFT’s case. Oxford Immunotec Global PLC (NASDAQ:OXFD) is the most popular stock in this table. On the other hand First Connecticut Bancorp Inc (NASDAQ:FBNK) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Hooker Furniture Corporation (NASDAQ:HOFT) 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