Is Harsco Corporation (HSC) Going To Burn These Hedge Funds ?

Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees during the first half of 2019 amid Powell’s pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the second quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Harsco Corporation (NYSE:HSC).

Harsco Corporation (NYSE:HSC) has seen a decrease in hedge fund interest recently. Our calculations also showed that HSC isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

According to most stock holders, hedge funds are assumed to be underperforming, old financial vehicles of years past. While there are greater than 8000 funds trading at present, Our experts look at the upper echelon of this group, approximately 750 funds. These investment experts shepherd bulk of all hedge funds’ total asset base, and by tailing their matchless picks, Insider Monkey has discovered several investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

Richard Driehaus

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the new hedge fund action surrounding Harsco Corporation (NYSE:HSC).

How are hedge funds trading Harsco Corporation (NYSE:HSC)?

At Q2’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HSC over the last 16 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with HSC Positions

Among these funds, Adage Capital Management held the most valuable stake in Harsco Corporation (NYSE:HSC), which was worth $45.2 million at the end of the second quarter. On the second spot was Scopus Asset Management which amassed $17.2 million worth of shares. Moreover, Driehaus Capital, Two Sigma Advisors, and D E Shaw were also bullish on Harsco Corporation (NYSE:HSC), allocating a large percentage of their portfolios to this stock.

Judging by the fact that Harsco Corporation (NYSE:HSC) has experienced bearish sentiment from the smart money, it’s easy to see that there were a few money managers who sold off their entire stakes in the second quarter. Interestingly, David Harding’s Winton Capital Management said goodbye to the largest investment of all the hedgies watched by Insider Monkey, comprising about $5.7 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also dumped its stock, about $1.1 million worth. These transactions are important to note, as total hedge fund interest dropped by 1 funds in the second quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Harsco Corporation (NYSE:HSC) but similarly valued. We will take a look at SVMK Inc. (NASDAQ:SVMK), Advanced Energy Industries, Inc. (NASDAQ:AEIS), Werner Enterprises, Inc. (NASDAQ:WERN), and BEST Inc. (NYSE:BEST). All of these stocks’ market caps are similar to HSC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SVMK 23 453141 3
AEIS 14 138830 -3
WERN 15 111134 -1
BEST 13 49071 -3
Average 16.25 188044 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $137 million in HSC’s case. SVMK Inc. (NASDAQ:SVMK) is the most popular stock in this table. On the other hand BEST Inc. (NYSE:BEST) is the least popular one with only 13 bullish hedge fund positions. Harsco Corporation (NYSE:HSC) 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HSC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on HSC were disappointed as the stock returned -30.9% during the third quarter 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 many of these stocks already outperformed the market so far this year.

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