Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Helen of Troy Limited (NASDAQ:HELE).
Is Helen of Troy Limited (NASDAQ:HELE) an outstanding investment now? Prominent investors are taking an optimistic view. The number of long hedge fund positions inched up by 2 recently. Our calculations also showed that HELE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 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 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 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.
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the new hedge fund action encompassing Helen of Troy Limited (NASDAQ:HELE).
Hedge fund activity in Helen of Troy Limited (NASDAQ:HELE)
Heading into the first quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HELE over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the biggest position in Helen of Troy Limited (NASDAQ:HELE), worth close to $103.6 million, amounting to 0.1% of its total 13F portfolio. On Fisher Asset Management’s heels is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $48.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish comprise Dmitry Balyasny’s Balyasny Asset Management, Steve Cohen’s Point72 Asset Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Cloverdale Capital Management allocated the biggest weight to Helen of Troy Limited (NASDAQ:HELE), around 1.93% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.5 percent of its 13F equity portfolio to HELE.
Now, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in Helen of Troy Limited (NASDAQ:HELE). Balyasny Asset Management had $17.4 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $6 million investment in the stock during the quarter. The following funds were also among the new HELE investors: C. Jonathan Gattman’s Cloverdale Capital Management, Hoon Kim’s Quantinno Capital, and Mike Vranos’s Ellington.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Helen of Troy Limited (NASDAQ:HELE) but similarly valued. These stocks are MorphoSys AG (NASDAQ:MOR), Janus Henderson Group plc (NYSE:JHG), ViaSat, Inc. (NASDAQ:VSAT), and Landstar System, Inc. (NASDAQ:LSTR). This group of stocks’ market caps match HELE’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 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $556 million. That figure was $208 million in HELE’s case. ViaSat, Inc. (NASDAQ:VSAT) is the most popular stock in this table. On the other hand MorphoSys AG (NASDAQ:MOR) is the least popular one with only 6 bullish hedge fund positions. Helen of Troy Limited (NASDAQ:HELE) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. A small number of hedge funds were also right about betting on HELE, though not to the same extent, as the stock returned -22.8% during the same time period and outperformed the market.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.