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Were Hedge Funds Right About Souring On Haemonetics Corporation (HAE)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider Haemonetics Corporation (NYSE:HAE) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is Haemonetics Corporation (NYSE:HAE) a buy, sell, or hold? Investors who are in the know are reducing their bets on the stock. The number of bullish hedge fund positions dropped by 2 recently. Our calculations also showed that HAE isn’t among the 30 most popular stocks among hedge funds. HAE was in 20 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 22 hedge funds in our database with HAE positions at the end of the previous quarter.

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Richard Driehaus

We’re going to take a glance at the new hedge fund action encompassing Haemonetics Corporation (NYSE:HAE).

Hedge fund activity in Haemonetics Corporation (NYSE:HAE)

HAE

More specifically, Renaissance Technologies was the largest shareholder of Haemonetics Corporation (NYSE:HAE), with a stake worth $242.1 million reported as of the end of September. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $86.9 million. Point72 Asset Management, Columbus Circle Investors, and Nitorum Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Due to the fact that Haemonetics Corporation (NYSE:HAE) has faced bearish sentiment from the smart money, logic holds that there is a sect of hedgies that elected to cut their full holdings heading into Q3. At the top of the heap, Arthur B Cohen and Joseph Healey’s Healthcor Management LP sold off the biggest investment of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $34.3 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dropped about $21.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q3.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Haemonetics Corporation (NYSE:HAE) but similarly valued. We will take a look at AngloGold Ashanti Limited (NYSE:AU), Affiliated Managers Group, Inc. (NYSE:AMG), Genpact Limited (NYSE:G), and StoneCo Ltd. (NASDAQ:STNE). All of these stocks’ market caps resemble HAE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AU 12 322457 2
AMG 27 505230 -5
G 22 428841 1
STNE 20 755177 20
Average 20.25 502926 4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $503 million. That figure was $567 million in HAE’s case. Affiliated Managers Group, Inc. (NYSE:AMG) is the most popular stock in this table. On the other hand AngloGold Ashanti Limited (NYSE:AU) is the least popular one with only 12 bullish hedge fund positions. Haemonetics Corporation (NYSE:HAE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Unfortunately HAE wasn’t in this group. Hedge funds that bet on HAE were disappointed as the stock returned -10.6% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 12 of these outperformed the market.

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

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