The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Harley-Davidson, Inc. (NYSE:HOG) based on those filings.
Is Harley-Davidson, Inc. (NYSE:HOG) a buy, sell, or hold? Money managers were selling. The number of long hedge fund positions fell by 7 in recent months. Harley-Davidson, Inc. (NYSE:HOG) was in 28 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that HOG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s check out the recent hedge fund action regarding Harley-Davidson, Inc. (NYSE:HOG).
Do Hedge Funds Think HOG Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the previous quarter. By comparison, 17 hedge funds held shares or bullish call options in HOG a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, H Partners Management was the largest shareholder of Harley-Davidson, Inc. (NYSE:HOG), with a stake worth $336.8 million reported as of the end of March. Trailing H Partners Management was Impala Asset Management, which amassed a stake valued at $102 million. Thunderbird Partners, Brahman Capital, and Millennium 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 H Partners Management allocated the biggest weight to Harley-Davidson, Inc. (NYSE:HOG), around 30.58% of its 13F portfolio. Thunderbird Partners is also relatively very bullish on the stock, earmarking 7.67 percent of its 13F equity portfolio to HOG.
Seeing as Harley-Davidson, Inc. (NYSE:HOG) has experienced bearish sentiment from the smart money, logic holds that there lies a certain “tier” of hedgies who sold off their full holdings heading into Q2. Intriguingly, Brad Farber’s Atika Capital dumped the biggest investment of all the hedgies monitored by Insider Monkey, comprising about $9.2 million in stock. Richard SchimeláandáLawrence Sapanski’s fund, Cinctive Capital Management, also said goodbye to its stock, about $4.7 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 7 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks similar to Harley-Davidson, Inc. (NYSE:HOG). We will take a look at Emcor Group Inc (NYSE:EME), MP Materials Corp. (NYSE:MP), Lattice Semiconductor Corporation (NASDAQ:LSCC), Coursera, Inc. (NYSE:COUR), Cimarex Energy Co (NYSE:XEC), Allakos Inc. (NASDAQ:ALLK), and Nexstar Media Group, Inc. (NASDAQ:NXST). This group of stocks’ market caps resemble HOG’s market cap.
|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 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $766 million. That figure was $823 million in HOG’s case. Cimarex Energy Co (NYSE:XEC) is the most popular stock in this table. On the other hand Allakos Inc. (NASDAQ:ALLK) is the least popular one with only 13 bullish hedge fund positions. Harley-Davidson, Inc. (NYSE:HOG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOG is 50.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on HOG, though not to the same extent, as the stock returned 13.9% since Q1 (through July 9th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.