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Is Herc Holdings Inc. (HRI) Going to Burn These Hedge Funds?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Herc Holdings Inc. (NYSE:HRI).

Herc Holdings Inc. (NYSE:HRI) investors should be aware of an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that HRI isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Most Popular Stocks Among Hedge Funds

We’re going to take a look at the fresh hedge fund action regarding Herc Holdings Inc. (NYSE:HRI).

What does the smart money think about Herc Holdings Inc. (NYSE:HRI)?

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in HRI heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

HRI_dec2018

The largest stake in Herc Holdings Inc. (NYSE:HRI) was held by Icahn Capital LP, which reported holding $230.1 million worth of stock at the end of September. It was followed by GAMCO Investors with a $179.9 million position. Other investors bullish on the company included PAR Capital Management, Highfields Capital Management, and Royce & Associates.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Ascend Capital, managed by Malcolm Fairbairn, assembled the most outsized position in Herc Holdings Inc. (NYSE:HRI). Ascend Capital had $14.1 million invested in the company at the end of the quarter. John Orrico’s Water Island Capital also initiated a $8.1 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Dmitry Balyasny’s Balyasny Asset Management, and Frederick DiSanto’s Ancora Advisors.

Let’s now review hedge fund activity in other stocks similar to Herc Holdings Inc. (NYSE:HRI). We will take a look at Natera Inc (NASDAQ:NTRA), Tortoise Energy Infrastructure Corporation (NYSE:TYG), U.S. Silica Holdings Inc (NYSE:SLCA), and Bright Scholar Education Holdings Limited (NYSE:BEDU). This group of stocks’ market caps are closest to HRI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NTRA 21 204485 7
TYG 3 17317 0
SLCA 16 302824 -1
BEDU 10 120386 -3
Average 12.5 161253 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $668 million in HRI’s case. Natera Inc (NASDAQ:NTRA) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Herc Holdings Inc. (NYSE:HRI) 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.

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

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