Hedge Funds Have Never Been This Bullish On Helen of Troy Limited (HELE)

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by more than 6 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Helen of Troy Limited (NASDAQ:HELE) from the perspective of those elite funds.

Is Helen of Troy Limited (NASDAQ:HELE) a good investment right now? Hedge funds are getting more bullish. The number of bullish hedge fund bets advanced by 4 in recent months. Our calculations also showed that hele isn’t among the 30 most popular stocks among hedge funds. HELE was in 21 hedge funds’ portfolios at the end of March. There were 17 hedge funds in our database with HELE positions at the end of the previous quarter.

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’ 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.

Dmitry Balyasny

We’re going to check out the new hedge fund action regarding Helen of Troy Limited (NASDAQ:HELE).

How have hedgies been trading Helen of Troy Limited (NASDAQ:HELE)?

At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HELE over the last 15 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

No of Hedge Funds with HELE Positions

Among these funds, Fisher Asset Management held the most valuable stake in Helen of Troy Limited (NASDAQ:HELE), which was worth $100.6 million at the end of the first quarter. On the second spot was Balyasny Asset Management which amassed $19.7 million worth of shares. Moreover, Renaissance Technologies, Citadel Investment Group, and Arrowstreet Capital were also bullish on Helen of Troy Limited (NASDAQ:HELE), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, key money managers have jumped into Helen of Troy Limited (NASDAQ:HELE) headfirst. Renaissance Technologies, managed by Jim Simons, created the most outsized position in Helen of Troy Limited (NASDAQ:HELE). Renaissance Technologies had $14.2 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $7.1 million position during the quarter. The following funds were also among the new HELE investors: D. E. Shaw’s D E Shaw, Steve Cohen’s Point72 Asset Management, and Matthew Tewksbury’s Stevens Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Helen of Troy Limited (NASDAQ:HELE) but similarly valued. We will take a look at Home Bancshares Inc (NASDAQ:HOMB), South Jersey Industries Inc (NYSE:SJI), Novanta Inc. (NASDAQ:NOVT), and Federated Investors Inc (NYSE:FII). All of these stocks’ market caps match HELE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HOMB 15 29568 5
SJI 11 60289 -1
NOVT 17 122951 -2
FII 13 131316 -2
Average 14 86031 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $175 million in HELE’s case. Novanta Inc. (NASDAQ:NOVT) is the most popular stock in this table. On the other hand South Jersey Industries Inc (NYSE:SJI) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Helen of Troy Limited (NASDAQ:HELE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on HELE as the stock returned 18.5% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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