While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding HEICO Corporation (NYSE:HEI).
Is HEI stock a buy or sell? HEICO Corporation (NYSE:HEI) has seen an increase in enthusiasm from smart money of late. HEICO Corporation (NYSE:HEI) was in 44 hedge funds’ portfolios at the end of December. The all time high for this statistic is 57. Our calculations also showed that HEI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock that will deliver a 10x return. 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 homepage (or at the end of this article). With all of this in mind we’re going to take a glance at the fresh hedge fund action regarding HEICO Corporation (NYSE:HEI).
Do Hedge Funds Think HEI Is A Good Stock To Buy Now?
At Q4’s end, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HEI over the last 22 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Gobi Capital held the most valuable stake in HEICO Corporation (NYSE:HEI), which was worth $106.7 million at the end of the fourth quarter. On the second spot was Fisher Asset Management which amassed $106.4 million worth of shares. Renaissance Technologies, Giverny Capital, and Silver Heights Capital Management 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 Silver Heights Capital Management allocated the biggest weight to HEICO Corporation (NYSE:HEI), around 22.29% of its 13F portfolio. Gobi Capital is also relatively very bullish on the stock, earmarking 8.66 percent of its 13F equity portfolio to HEI.
As industrywide interest jumped, key hedge funds have jumped into HEICO Corporation (NYSE:HEI) headfirst. Renaissance Technologies, assembled the most valuable position in HEICO Corporation (NYSE:HEI). Renaissance Technologies had $9.3 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also initiated a $6.8 million position during the quarter. The other funds with brand new HEI positions are Michael Hintze’s CQS Cayman LP, Terry Smith’s Fundsmith Long/Short Fund, and Robert Vincent McHugh’s Jade Capital Advisors.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as HEICO Corporation (NYSE:HEI) but similarly valued. We will take a look at Invitation Homes Inc. (NYSE:INVH), FirstEnergy Corp. (NYSE:FE), Monolithic Power Systems, Inc. (NASDAQ:MPWR), The Liberty SiriusXM Group (NASDAQ:LSXMA), Carnival Corporation & plc (NYSE:CUK), Logitech International SA (NASDAQ:LOGI), and Tractor Supply Company (NASDAQ:TSCO). All of these stocks’ market caps match HEI’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 30.9 hedge funds with bullish positions and the average amount invested in these stocks was $886 million. That figure was $786 million in HEI’s case. FirstEnergy Corp. (NYSE:FE) is the most popular stock in this table. On the other hand Carnival Corporation & plc (NYSE:CUK) is the least popular one with only 7 bullish hedge fund positions. HEICO Corporation (NYSE:HEI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HEI is 72.2. 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. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately HEI wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on HEI were disappointed as the stock returned -5.3% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Heico Corp (NYSE:HEI, HEI.A)
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Disclosure: None. This article was originally published at Insider Monkey.