We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Hudson Ltd. (NYSE:HUD) based on that data.
Hudson Ltd. (NYSE:HUD) has seen an increase in hedge fund interest of late. Our calculations also showed that HUD isn't among the 30 most popular stocks among hedge funds (click for Q1 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 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Brown Hawk Ridge Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a gander at the latest hedge fund action regarding Hudson Ltd. (NYSE:HUD).
What have hedge funds been doing with Hudson Ltd. (NYSE:HUD)?
Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in HUD a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is HUD A Good Stock To Buy?
The largest stake in Hudson Ltd. (NYSE:HUD) was held by Newtyn Management, which reported holding $10 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $8.6 million position. Other investors bullish on the company included Hawk Ridge Management, D E Shaw, and Alden Global Capital. In terms of the portfolio weights assigned to each position Newtyn Management allocated the biggest weight to Hudson Ltd. (NYSE:HUD), around 3.46% of its 13F portfolio. Hawk Ridge Management is also relatively very bullish on the stock, designating 1.03 percent of its 13F equity portfolio to HUD.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Newtyn Management, managed by Noah Levy and Eugene Dozortsev, assembled the most valuable position in Hudson Ltd. (NYSE:HUD). Newtyn Management had $10 million invested in the company at the end of the quarter. David Brown's Hawk Ridge Management also initiated a $6.1 million position during the quarter. The other funds with new positions in the stock are Randall Smith's Alden Global Capital, Chuck Royce's Royce & Associates, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's also examine hedge fund activity in other stocks similar to Hudson Ltd. (NYSE:HUD). These stocks are First Financial Corp (NASDAQ:THFF), Ebix Inc (NASDAQ:EBIX), Nexa Resources S.A. (NYSE:NEXA), and Sinovac Biotech Ltd. (NASDAQ:SVA). This group of stocks' market valuations are similar to HUD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position THFF,10,20394,-1 EBIX,15,44736,-4 NEXA,4,2109,-1 SVA,3,56861,-1 Average,8,31025,-1.75 [/table]
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $35 million in HUD's case. Ebix Inc (NASDAQ:EBIX) is the most popular stock in this table. On the other hand Sinovac Biotech Ltd. (NASDAQ:SVA) is the least popular one with only 3 bullish hedge fund positions. Hudson Ltd. (NYSE:HUD) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately HUD wasn't nearly as popular as these 10 stocks and hedge funds that were betting on HUD were disappointed as the stock returned -5.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
