Hedge Funds Have Never Been This Bullish On Home Bancshares, Inc. (HOMB)

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 first 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 4.5 years and analyze what the smart money thinks of Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) based on that data.

Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) shareholders have witnessed an increase in support from the world’s most elite money managers of late. Our calculations also showed that HOMB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Matthew Lindenbaum Basswood Capital

Matthew Lindenbaum of Basswood Capital

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. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to analyze the latest hedge fund action encompassing Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB).

How have hedgies been trading Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB)?

At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 67% from the fourth quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in HOMB a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

More specifically, Balyasny Asset Management was the largest shareholder of Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB), with a stake worth $3.3 million reported as of the end of September. Trailing Balyasny Asset Management was GLG Partners, which amassed a stake valued at $3.2 million. Basswood Capital, Citadel Investment Group, and AQR 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 AlphaOne Capital Partners allocated the biggest weight to Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB), around 0.63% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, dishing out 0.26 percent of its 13F equity portfolio to HOMB.

As industrywide interest jumped, key hedge funds were breaking ground themselves. AQR Capital Management, managed by Cliff Asness, assembled the most valuable position in Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB). AQR Capital Management had $1.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.9 million position during the quarter. The following funds were also among the new HOMB investors: D. E. Shaw’s D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors, and Greg Eisner’s Engineers Gate Manager.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) but similarly valued. We will take a look at National Beverage Corp. (NASDAQ:FIZZ), Stepan Company (NYSE:SCL), BancorpSouth Bank (NYSE:BXS), and Investors Bancorp, Inc. (NASDAQ:ISBC). All of these stocks’ market caps match HOMB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FIZZ 20 202468 -1
SCL 10 48020 -3
BXS 15 36662 1
ISBC 26 136450 -4
Average 17.75 105900 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $16 million in HOMB’s case. Investors Bancorp, Inc. (NASDAQ:ISBC) is the most popular stock in this table. On the other hand Stepan Company (NYSE:SCL) is the least popular one with only 10 bullish hedge fund positions. Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but still beat the market by 14.8 percentage points. Hedge funds were also right about betting on HOMB as the stock returned 28% in Q2 (through June 17th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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