Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is Haverty Furniture Companies, Inc. (NYSE:HVT) a buy here? Hedge funds are in an optimistic mood. The number of long hedge fund bets that are revealed through the 13F filings rose by 1 recently. HVT was in 11 hedge funds’ portfolios at the end of the third quarter of 2016. There were 10 hedge funds in our database with HVT positions at the end of the previous quarter. 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 Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN), Tarena International Inc(ADR) (NASDAQ:TEDU), and First Community Bancshares Inc (NASDAQ:FCBC) to gather more data points.
Follow Haverty Furniture Companies Inc (NYSE:HVT)
Follow Haverty Furniture Companies Inc (NYSE:HVT)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
What have hedge funds been doing with Haverty Furniture Companies, Inc. (NYSE:HVT)?
Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a 10% increase from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HVT over the last 5 quarters, which has remained very stable. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in Haverty Furniture Companies, Inc. (NYSE:HVT), worth close to $29.6 million. The second most bullish fund manager is Renaissance Technologies, one of the largest hedge funds in the world, with a $26.9 million position. Some other members of the smart money that hold long positions contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Millennium Management, and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key hedge funds were breaking ground themselves. McKinley Capital Management, led by Robert B. Gillam, established the most valuable position in Haverty Furniture Companies, Inc. (NYSE:HVT). McKinley Capital Management had $0.3 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Haverty Furniture Companies, Inc. (NYSE:HVT) but similarly valued. These stocks are Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN), Tarena International Inc(ADR) (NASDAQ:TEDU), First Community Bancshares Inc (NASDAQ:FCBC), and Tsakos Energy Navigation Ltd. (NYSE:TNP). This group of stocks’ market valuations resemble HVT’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $68 million in HVT’s case. Tsakos Energy Navigation Ltd. (NYSE:TNP) is the most popular stock in this table. On the other hand First Community Bancshares Inc (NASDAQ:FCBC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Haverty Furniture Companies, Inc. (NYSE:HVT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.