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Were Hedge Funds Right About Flocking Into Hanesbrands Inc. (HBI) ?

Insider Monkey finished processing more than 700 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2018. What do these smart investors think about Hanesbrands Inc. (NYSE:HBI)?

Is Hanesbrands Inc. (NYSE:HBI) a buy, sell, or hold? Money managers are becoming more confident. The number of long hedge fund positions inched up by 10 in recent months. Our calculations also showed that HBI isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Kerr Neilson

We’re going to go over the recent hedge fund action encompassing Hanesbrands Inc. (NYSE:HBI).

What does the smart money think about Hanesbrands Inc. (NYSE:HBI)?

Heading into the first quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 56% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards HBI over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

HBI_apr2019

Among these funds, Diamond Hill Capital held the most valuable stake in Hanesbrands Inc. (NYSE:HBI), which was worth $137.7 million at the end of the third quarter. On the second spot was Chieftain Capital which amassed $84.1 million worth of shares. Moreover, Platinum Asset Management, Millennium Management, and Marshall Wace LLP were also bullish on Hanesbrands Inc. (NYSE:HBI), allocating a large percentage of their portfolios to this stock.

Now, specific money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the most valuable position in Hanesbrands Inc. (NYSE:HBI). Marshall Wace LLP had $10.1 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $5.6 million position during the quarter. The following funds were also among the new HBI investors: Joel Greenblatt’s Gotham Asset Management, Mike Vranos’s Ellington, and Michael O’Keefe’s 12th Street Asset Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Hanesbrands Inc. (NYSE:HBI) but similarly valued. We will take a look at TFS Financial Corporation (NASDAQ:TFSL), The Stars Group Inc. (NASDAQ:TSG), Wyndham Hotels & Resorts, Inc. (NYSE:WH), and Cameco Corporation (NYSE:CCJ). This group of stocks’ market caps are similar to HBI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TFSL 7 137225 -2
TSG 40 582898 -12
WH 37 834677 -2
CCJ 24 346331 5
Average 27 475283 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $475 million. That figure was $310 million in HBI’s case. The Stars Group Inc. (NASDAQ:TSG) is the most popular stock in this table. On the other hand TFS Financial Corporation (NASDAQ:TFSL) is the least popular one with only 7 bullish hedge fund positions. Hanesbrands Inc. (NYSE:HBI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on HBI as the stock returned 49.9% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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