In this article we will check out the progression of hedge fund sentiment towards Herc Holdings Inc. (NYSE:HRI) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Herc Holdings Inc. (NYSE:HRI) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 29. HRI investors should pay attention to an increase in activity from the world’s largest hedge funds lately. There were 17 hedge funds in our database with HRI positions at the end of the first quarter. Our calculations also showed that HRI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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Do Hedge Funds Think HRI Is A Good Stock To Buy Now?
At the end of June, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HRI over the last 24 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Icahn Capital LP was the largest shareholder of Herc Holdings Inc. (NYSE:HRI), with a stake worth $503.7 million reported as of the end of June. Trailing Icahn Capital LP was GAMCO Investors, which amassed a stake valued at $291.1 million. Impax Asset Management, Electron Capital Partners, and Arrowstreet Capital 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 Electron Capital Partners allocated the biggest weight to Herc Holdings Inc. (NYSE:HRI), around 2.95% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, setting aside 2.47 percent of its 13F equity portfolio to HRI.
As industrywide interest jumped, some big names have jumped into Herc Holdings Inc. (NYSE:HRI) headfirst. Impax Asset Management, managed by Ian Simm, created the largest position in Herc Holdings Inc. (NYSE:HRI). Impax Asset Management had $93.5 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $14.6 million investment in the stock during the quarter. The following funds were also among the new HRI investors: Clint Carlson’s Carlson Capital, D. E. Shaw’s D E Shaw, and Ryan Caldwell’s Chiron Investment Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Herc Holdings Inc. (NYSE:HRI) but similarly valued. We will take a look at Grocery Outlet Holding Corp. (NASDAQ:GO), Hillenbrand, Inc. (NYSE:HI), Intra-Cellular Therapies Inc (NASDAQ:ITCI), Asbury Automotive Group, Inc. (NYSE:ABG), Sogou Inc. (NYSE:SOGO), Liberty Latin America Ltd. (NASDAQ:LILAK), and Spirit Airlines Incorporated (NASDAQ:SAVE). All of these stocks’ market caps are similar to HRI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GO | 13 | 42791 | -2 |
| HI | 14 | 23903 | -1 |
| ITCI | 23 | 379057 | 8 |
| ABG | 26 | 821483 | 6 |
| SOGO | 19 | 147506 | 3 |
| LILAK | 27 | 556849 | -2 |
| SAVE | 29 | 247716 | 5 |
| Average | 21.6 | 317044 | 2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $317 million. That figure was $1070 million in HRI’s case. Spirit Airlines Incorporated (NASDAQ:SAVE) is the most popular stock in this table. On the other hand Grocery Outlet Holding Corp. (NASDAQ:GO) is the least popular one with only 13 bullish hedge fund positions. Herc Holdings Inc. (NYSE:HRI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HRI is 50.6. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on HRI as the stock returned 67.7% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
Follow Herc Holdings Inc (NYSE:HRI)
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Disclosure: None. This article was originally published at Insider Monkey.
