Is HOME A Good Stock To Buy According To Hedge Funds?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is At Home Group Inc. (NYSE:HOME), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is HOME a good stock to buy? Home Group Inc. (NYSE:HOME) was in 34 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. HOME investors should pay attention to an increase in hedge fund sentiment recently. There were 27 hedge funds in our database with HOME holdings at the end of June. Our calculations also showed that HOME 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Driehaus of Driehaus Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 we’re going to take a peek at the recent hedge fund action encompassing At Home Group Inc. (NYSE:HOME).

Do Hedge Funds Think HOME Is A Good Stock To Buy Now?

At third quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in HOME a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is HOME A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, CAS Investment Partners, managed by Clifford A. Sosin, holds the biggest position in At Home Group Inc. (NYSE:HOME). CAS Investment Partners has a $155 million position in the stock, comprising 10.7% of its 13F portfolio. Sitting at the No. 2 spot is D E Shaw, led by D. E. Shaw, holding a $30.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish include Vadim Rubinchik’s Brightlight Capital, Angela Aldrich’s Bayberry Capital Partners and Derek C. Schrier’s Indaba Capital Management. In terms of the portfolio weights assigned to each position CAS Investment Partners allocated the biggest weight to At Home Group Inc. (NYSE:HOME), around 10.75% of its 13F portfolio. Brightlight Capital is also relatively very bullish on the stock, earmarking 8.46 percent of its 13F equity portfolio to HOME.

With a general bullishness amongst the heavyweights, specific money managers have jumped into At Home Group Inc. (NYSE:HOME) headfirst. Bayberry Capital Partners, managed by Angela Aldrich, assembled the most outsized position in At Home Group Inc. (NYSE:HOME). Bayberry Capital Partners had $16.6 million invested in the company at the end of the quarter. Derek C. Schrier’s Indaba Capital Management also made a $16.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Richard Driehaus’s Driehaus Capital, Renaissance Technologies, and Kamyar Khajavi’s MIK Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as At Home Group Inc. (NYSE:HOME) but similarly valued. We will take a look at Schweitzer-Mauduit International, Inc. (NYSE:SWM), Construction Partners, Inc. (NASDAQ:ROAD), Vocera Communications Inc (NYSE:VCRA), PetIQ, Inc. (NASDAQ:PETQ), Retrophin Inc (NASDAQ:RTRX), Phathom Pharmaceuticals, Inc. (NASDAQ:PHAT), and Theravance Biopharma Inc (NASDAQ:TBPH). This group of stocks’ market values are similar to HOME’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SWM 11 16466 2
ROAD 11 35881 1
VCRA 18 181990 3
PETQ 13 132362 -3
RTRX 24 370363 -2
PHAT 6 375079 1
TBPH 17 291643 -1
Average 14.3 200541 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $201 million. That figure was $371 million in HOME’s case. Retrophin Inc (NASDAQ:RTRX) is the most popular stock in this table. On the other hand Phathom Pharmaceuticals, Inc. (NASDAQ:PHAT) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks At Home Group Inc. (NYSE:HOME) is more popular among hedge funds. Our overall hedge fund sentiment score for HOME is 90. 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Unfortunately HOME wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on HOME were disappointed as the stock returned 6.6% since the end of the third quarter (through 12/18) 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 most of these stocks already outperformed the market in 2020.

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