Hedge Funds Have Never Been Less Bullish On Hi-Crush Inc. (HCR)

We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Hi-Crush Inc. (NYSE:HCR) based on that data.

Hi-Crush Inc. (NYSE:HCR) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of the third quarter of 2019. 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 Ohio Valley Banc Corp. (NASDAQ:OVBC), MainStreet Bancshares, Inc. (NASDAQ:MNSB), and Silvercrest Asset Management Group Inc. (NASDAQ:SAMG) to gather more data points. Our calculations also showed that HCR isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

William Harnisch

William Harnisch of Peconic Partners LLC

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s view the key hedge fund action regarding Hi-Crush Inc. (NYSE:HCR).

How are hedge funds trading Hi-Crush Inc. (NYSE:HCR)?

At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in HCR a year ago. One would expect to see a larger number of hedge fund owners in a company that’s operating in one of the countries with the biggest oil reserves in the world.

No of Hedge Funds with HCR Positions

More specifically, Renaissance Technologies was the largest shareholder of Hi-Crush Inc. (NYSE:HCR), with a stake worth $2.6 million reported as of the end of September. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $0.5 million. ExodusPoint Capital was 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 Peconic Partners allocated the biggest weight to Hi-Crush Inc. (NYSE:HCR), around 0.01% of its portfolio. ExodusPoint Capital is also relatively very bullish on the stock, setting aside 0.0025 percent of its 13F equity portfolio to HCR.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now review hedge fund activity in other stocks similar to Hi-Crush Inc. (NYSE:HCR). We will take a look at Ohio Valley Banc Corp. (NASDAQ:OVBC), MainStreet Bancshares, Inc. (NASDAQ:MNSB), Silvercrest Asset Management Group Inc. (NASDAQ:SAMG), and XOMA Corporation (NASDAQ:XOMA). This group of stocks’ market caps are closest to HCR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OVBC 1 1839 0
MNSB 2 12983 -1
SAMG 4 12825 1
XOMA 5 43538 -2
Average 3 17796 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $3 million in HCR’s case. XOMA Corporation (NASDAQ:XOMA) is the most popular stock in this table. On the other hand Ohio Valley Banc Corp. (NASDAQ:OVBC) is the least popular one with only 1 bullish hedge fund positions. Hi-Crush Inc. (NYSE:HCR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately HCR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HCR investors were disappointed as the stock returned -52.9% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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