Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Hurco Companies, Inc. (NASDAQ:HURC) changed recently.
Hedge fund interest in Hurco Companies, Inc. (NASDAQ:HURC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that HURC 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). At the end of this article we will also compare HURC to other stocks including RCI Hospitality Holdings, Inc. (NASDAQ:RICK), CompX International Inc. (NYSE:CIX), and Perion Network Ltd (NASDAQ:PERI) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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. Keeping this in mind we’re going to view the latest hedge fund action encompassing Hurco Companies, Inc. (NASDAQ:HURC).
How are hedge funds trading Hurco Companies, Inc. (NASDAQ:HURC)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HURC over the last 21 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the biggest position in Hurco Companies, Inc. (NASDAQ:HURC). Royce & Associates has a $23.8 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Renaissance Technologies, which holds a $2.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism contain Tim Curro’s Value Holdings LP, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) and . In terms of the portfolio weights assigned to each position Value Holdings LP allocated the biggest weight to Hurco Companies, Inc. (NASDAQ:HURC), around 0.84% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.26 percent of its 13F equity portfolio to HURC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Two Sigma Advisors. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Prelude Capital (previously Springbok Capital)).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Hurco Companies, Inc. (NASDAQ:HURC) but similarly valued. We will take a look at RCI Hospitality Holdings, Inc. (NASDAQ:RICK), CompX International Inc. (NYSE:CIX), Perion Network Ltd (NASDAQ:PERI), Liquidia Technologies, Inc. (NASDAQ:LQDA), Overseas Shipholding Group, Inc. (NYSE:OSG), Flexsteel Industries, Inc. (NASDAQ:FLXS), and Luna Innovations Incorporated (NASDAQ:LUNA). This group of stocks’ market valuations are similar to HURC’s market valuation.
|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 8.3 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $29 million in HURC’s case. Overseas Shipholding Group, Inc. (NYSE:OSG) is the most popular stock in this table. On the other hand CompX International Inc. (NYSE:CIX) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Hurco Companies, Inc. (NASDAQ:HURC) is even less popular than CIX. Our overall hedge fund sentiment score for HURC is 18.3. 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. Hedge funds dodged a bullet by taking a bearish stance towards HURC. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th but managed to beat the market again by 16.1 percentage points. Unfortunately HURC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); HURC investors were disappointed as the stock returned 7.4% since the end of the third quarter (through 11/27) 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 so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.