Hedge Funds Are Warming Up To Hanesbrands Inc. (HBI)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Hanesbrands Inc. (NYSE:HBI) based on that data.

Is Hanesbrands Inc. (NYSE:HBI) going to take off soon? Prominent investors were in a bullish mood. The number of long hedge fund positions rose by 5 in recent months. Hanesbrands Inc. (NYSE:HBI) was in 32 hedge funds’ portfolios at the end of March. The all time high for this statistic is 42. Our calculations also showed that HBI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 27 hedge funds in our database with HBI holdings at the end of December.

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Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s go over the new hedge fund action regarding Hanesbrands Inc. (NYSE:HBI).

Do Hedge Funds Think HBI Is A Good Stock To Buy Now?

At Q1’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HBI over the last 23 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

More specifically, Diamond Hill Capital was the largest shareholder of Hanesbrands Inc. (NYSE:HBI), with a stake worth $400.6 million reported as of the end of March. Trailing Diamond Hill Capital was Lyrical Asset Management, which amassed a stake valued at $280.8 million. Arrowstreet Capital, Millennium Management, and Wallace Capital 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 Prentice Capital Management allocated the biggest weight to Hanesbrands Inc. (NYSE:HBI), around 5.7% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, earmarking 3.3 percent of its 13F equity portfolio to HBI.

As aggregate interest increased, some big names have been driving this bullishness. Bridgewater Associates, managed by Ray Dalio, assembled the most valuable position in Hanesbrands Inc. (NYSE:HBI). Bridgewater Associates had $6.4 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $3.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, John Overdeck and David Siegel’s Two Sigma Advisors, and Renaissance Technologies.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Hanesbrands Inc. (NYSE:HBI) but similarly valued. These stocks are Ballard Power Systems Inc. (NASDAQ:BLDP), MINISO Group Holding Limited (NYSE:MNSO), GW Pharmaceuticals plc (NASDAQ:GWPH), Post Holdings Inc (NYSE:POST), Synovus Financial Corp. (NYSE:SNV), Dicks Sporting Goods Inc (NYSE:DKS), and TG Therapeutics Inc (NASDAQ:TGTX). This group of stocks’ market caps are similar to HBI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BLDP 18 125641 -2
MNSO 12 87616 -6
GWPH 40 2735520 23
POST 33 1567551 6
SNV 30 264409 -3
DKS 31 852354 -11
TGTX 27 859565 -11
Average 27.3 927522 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $928 million. That figure was $978 million in HBI’s case. GW Pharmaceuticals plc (NASDAQ:GWPH) is the most popular stock in this table. On the other hand MINISO Group Holding Limited (NYSE:MNSO) is the least popular one with only 12 bullish hedge fund positions. Hanesbrands Inc. (NYSE:HBI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HBI is 68.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately HBI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HBI were disappointed as the stock returned -5% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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