At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Heritage-Crystal Clean, Inc. (NASDAQ:HCCI).
Is HCCI a good stock to buy now? Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) investors should be aware of a decrease in hedge fund interest lately. Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 13. There were 12 hedge funds in our database with HCCI positions at the end of the second quarter. Our calculations also showed that HCCI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most market participants, hedge funds are seen as slow, outdated investment tools of years past. While there are more than 8000 funds with their doors open today, We hone in on the upper echelon of this club, approximately 850 funds. It is estimated that this group of investors control the majority of all hedge funds’ total asset base, and by following their matchless picks, Insider Monkey has found many investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let’s check out the latest hedge fund action regarding Heritage-Crystal Clean, Inc. (NASDAQ:HCCI).
Do Hedge Funds Think HCCI Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the second quarter of 2020. On the other hand, there were a total of 13 hedge funds with a bullish position in HCCI 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.
Among these funds, Cannell Capital held the most valuable stake in Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), which was worth $11.1 million at the end of the third quarter. On the second spot was Cove Street Capital which amassed $8 million worth of shares. Royce & Associates, Renaissance Technologies, and Springbok Capital 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 Cannell Capital allocated the biggest weight to Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), around 4.07% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, earmarking 1.51 percent of its 13F equity portfolio to HCCI.
Judging by the fact that Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) has experienced falling interest from hedge fund managers, it’s easy to see that there exists a select few hedgies who sold off their entire stakes in the third quarter. At the top of the heap, Israel Englander’s Millennium Management said goodbye to the largest position of all the hedgies followed by Insider Monkey, worth an estimated $1.4 million in stock. Cliff Asness’s fund, AQR Capital Management, also dumped its stock, about $0.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) but similarly valued. These stocks are UFP Technologies, Inc. (NASDAQ:UFPT), Bar Harbor Bankshares (NYSE:BHB), Business First Bancshares, Inc. (NASDAQ:BFST), DSP Group, Inc. (NASDAQ:DSPG), OptimizeRx Corporation (NASDAQ:OPRX), Meten EdtechX Education Group Ltd. (NASDAQ:METX), and Conn’s, Inc. (NASDAQ:CONN). All of these stocks’ market caps resemble HCCI’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 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $38 million in HCCI’s case. DSP Group, Inc. (NASDAQ:DSPG) is the most popular stock in this table. On the other hand Bar Harbor Bankshares (NYSE:BHB) is the least popular one with only 2 bullish hedge fund positions. Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HCCI is 66.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on HCCI as the stock returned 57.2% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.