Is Haynes International, Inc. (NASDAQ:HAYN) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Haynes International, Inc. (NASDAQ:HAYN) was in 15 hedge funds’ portfolios at the end of September. HAYN has seen an increase in hedge fund sentiment lately. There were 10 hedge funds in our database with HAYN positions at the end of the previous quarter. Our calculations also showed that HAYN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to analyze the latest hedge fund action encompassing Haynes International, Inc. (NASDAQ:HAYN).
How are hedge funds trading Haynes International, Inc. (NASDAQ:HAYN)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the second quarter of 2019. On the other hand, there were a total of 8 hedge funds with a bullish position in HAYN a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Haynes International, Inc. (NASDAQ:HAYN) was held by Royce & Associates, which reported holding $30.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $13.5 million position. Other investors bullish on the company included Millennium Management, GAMCO Investors, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Haynes International, Inc. (NASDAQ:HAYN), around 0.28% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.11 percent of its 13F equity portfolio to HAYN.
Consequently, some big names were leading the bulls’ herd. AQR Capital Management, managed by Cliff Asness, created the biggest position in Haynes International, Inc. (NASDAQ:HAYN). AQR Capital Management had $1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.4 million position during the quarter. The following funds were also among the new HAYN investors: Minhua Zhang’s Weld Capital Management, Donald Sussman’s Paloma Partners, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Let’s also examine hedge fund activity in other stocks similar to Haynes International, Inc. (NASDAQ:HAYN). These stocks are Central Puerto S.A. (NYSE:CEPU), AVROBIO, Inc. (NASDAQ:AVRO), NACCO Industries, Inc. (NYSE:NC), and Village Farms International, Inc. (NASDAQ:VFF). This group of stocks’ market values are closest to HAYN’s market value.
|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 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $56 million in HAYN’s case. AVROBIO, Inc. (NASDAQ:AVRO) is the most popular stock in this table. On the other hand Village Farms International, Inc. (NASDAQ:VFF) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Haynes International, Inc. (NASDAQ:HAYN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately HAYN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on HAYN were disappointed as the stock returned 3.1% during the first two months of the fourth quarter 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.