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Hedge Funds Nibbling On Hamilton Beach Brands Holding Company (HBB)

In this article you are going to find out whether hedge funds think Hamilton Beach Brands Holding Company (NYSE:HBB) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Hamilton Beach Brands Holding Company (NYSE:HBB) has experienced an increase in enthusiasm from smart money in recent months. Our calculations also showed that HBB 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.

Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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 let’s take a gander at the new hedge fund action surrounding Hamilton Beach Brands Holding Company (NYSE:HBB).

Hedge fund activity in Hamilton Beach Brands Holding Company (NYSE:HBB)

At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HBB over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Is HBB A Good Stock To Buy?

The largest stake in Hamilton Beach Brands Holding Company (NYSE:HBB) was held by Arrowstreet Capital, which reported holding $0.5 million worth of stock at the end of September. It was followed by Ancora Advisors with a $0.3 million position. Other investors bullish on the company included Invenomic Capital Management, Millennium Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to Hamilton Beach Brands Holding Company (NYSE:HBB), around 0.27% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.18 percent of its 13F equity portfolio to HBB.

As aggregate interest increased, some big names have jumped into Hamilton Beach Brands Holding Company (NYSE:HBB) headfirst. Citadel Investment Group, managed by Ken Griffin, initiated the most valuable position in Hamilton Beach Brands Holding Company (NYSE:HBB). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Hamilton Beach Brands Holding Company (NYSE:HBB) but similarly valued. We will take a look at Republic First Bancorp, Inc. (NASDAQ:FRBK), VolitionRX Limited (NYSE:VNRX), Graham Corporation (NYSE:GHM), and Unity Bancorp, Inc. (NASDAQ:UNTY). This group of stocks’ market caps are closest to HBB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FRBK 7 3468 1
VNRX 1 454 -1
GHM 5 12739 -5
UNTY 4 9903 0
Average 4.25 6641 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $2 million in HBB’s case. Republic First Bancorp, Inc. (NASDAQ:FRBK) is the most popular stock in this table. On the other hand VolitionRX Limited (NYSE:VNRX) is the least popular one with only 1 bullish hedge fund positions. Hamilton Beach Brands Holding Company (NYSE:HBB) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately HBB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HBB were disappointed as the stock returned 9.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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