At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Hasbro, Inc. (NASDAQ:HAS) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Hasbro, Inc. (NASDAQ:HAS) was in 23 hedge funds’ portfolios at the end of June. The all time high for this statistics is 36. HAS shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 25 hedge funds in our database with HAS holdings at the end of March. Our calculations also showed that HAS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers after its stock price crashed. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind let’s view the fresh hedge fund action surrounding Hasbro, Inc. (NASDAQ:HAS).
What have hedge funds been doing with Hasbro, Inc. (NASDAQ:HAS)?
At Q2’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the first quarter of 2020. On the other hand, there were a total of 24 hedge funds with a bullish position in HAS a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in Hasbro, Inc. (NASDAQ:HAS). AQR Capital Management has a $32.3 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Alyeska Investment Group, managed by Anand Parekh, which holds a $32.1 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions contain Ken Griffin’s Citadel Investment Group, John Brennan’s Sirios Capital Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Sirios Capital Management allocated the biggest weight to Hasbro, Inc. (NASDAQ:HAS), around 1.32% of its 13F portfolio. Deep Field Asset Management is also relatively very bullish on the stock, dishing out 1.2 percent of its 13F equity portfolio to HAS.
Due to the fact that Hasbro, Inc. (NASDAQ:HAS) has experienced a decline in interest from hedge fund managers, we can see that there was a specific group of fund managers who were dropping their full holdings last quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dropped the biggest stake of all the hedgies watched by Insider Monkey, totaling an estimated $39.7 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund said goodbye to about $27 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Hasbro, Inc. (NASDAQ:HAS). We will take a look at Cognex Corporation (NASDAQ:CGNX), Korea Electric Power Corporation (NYSE:KEP), W.R. Berkley Corporation (NYSE:WRB), Celanese Corporation (NYSE:CE), Discovery Inc. (NASDAQ:DISCA), Concho Resources Inc. (NYSE:CXO), and Lyft, Inc. (NASDAQ:LYFT). This group of stocks’ market valuations are similar to HAS’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $415 million. That figure was $150 million in HAS’s case. Concho Resources Inc. (NYSE:CXO) is the most popular stock in this table. On the other hand Korea Electric Power Corporation (NYSE:KEP) is the least popular one with only 3 bullish hedge fund positions. Hasbro, Inc. (NASDAQ:HAS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HAS is 46.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on HAS as the stock returned 11.4% in the third quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.