HMN Financial, Inc. (HMNF): Hedge Funds In Wait-and-See Mode

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards HMN Financial, Inc. (NASDAQ:HMNF).

HMN Financial, Inc. (NASDAQ:HMNF) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Northern Technologies International Corporation (NASDAQ:NTIC), T2 Biosystems Inc (NASDAQ:TTOO), and Gamida Cell Ltd. (NASDAQ:GMDA) to gather more data points. Our calculations also showed that HMNF isn’t among the 30 most popular stocks among hedge funds.

To most investors, hedge funds are perceived as slow, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation today, We choose to focus on the bigwigs of this club, around 750 funds. These hedge fund managers orchestrate most of the hedge fund industry’s total capital, and by tracking their first-class stock picks, Insider Monkey has unearthed various investment strategies that have historically outrun the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .


Jim Simons of Renaissance Technologies

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s check out the recent hedge fund action regarding HMN Financial, Inc. (NASDAQ:HMNF).

How have hedgies been trading HMN Financial, Inc. (NASDAQ:HMNF)?

Heading into the fourth quarter of 2019, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards HMNF over the last 17 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

No of Hedge Funds with HMNF Positions

More specifically, Castine Capital Management was the largest shareholder of HMN Financial, Inc. (NASDAQ:HMNF), with a stake worth $6.6 million reported as of the end of September. Trailing Castine Capital Management was Tontine Asset Management, which amassed a stake valued at $6.4 million. Renaissance Technologies was 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 Castine Capital Management allocated the biggest weight to HMN Financial, Inc. (NASDAQ:HMNF), around 1.79% of its portfolio. Tontine Asset Management is also relatively very bullish on the stock, designating 0.91 percent of its 13F equity portfolio to HMNF.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as HMN Financial, Inc. (NASDAQ:HMNF) but similarly valued. These stocks are Northern Technologies International Corporation (NASDAQ:NTIC), T2 Biosystems Inc (NASDAQ:TTOO), Gamida Cell Ltd. (NASDAQ:GMDA), and Ring Energy Inc (NYSE:REI). All of these stocks’ market caps are closest to HMNF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NTIC 5 7660 2
TTOO 5 1399 -2
GMDA 6 11160 -1
REI 8 2213 -3
Average 6 5608 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $15 million in HMNF’s case. Ring Energy Inc (NYSE:REI) is the most popular stock in this table. On the other hand Northern Technologies International Corporation (NASDAQ:NTIC) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks HMN Financial, Inc. (NASDAQ:HMNF) is even less popular than NTIC. Hedge funds dodged a bullet by taking a bearish stance towards HMNF. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately HMNF wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); HMNF investors were disappointed as the stock returned -9.3% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

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