Here’s What Hedge Funds Think About Huntington Bancshares Incorporated (HBAN)

Nina Todic

Is Huntington Bancshares Incorporated (NASDAQ:HBAN) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Hedge fund interest in Huntington Bancshares Incorporated (NASDAQ:HBAN) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare HBAN to other stocks including WPP plc (NYSE:WPP), STMicroelectronics N.V. (NYSE:STM), and The J.M. Smucker Company (NYSE:SJM) to get a better sense of its popularity.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny

We're going to analyze the key hedge fund action surrounding Huntington Bancshares Incorporated (NASDAQ:HBAN).

Hedge fund activity in Huntington Bancshares Incorporated (NASDAQ:HBAN)

Heading into the second quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 33 hedge funds held shares or bullish call options in HBAN a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

No of Hedge Funds with HBAN Positions

Among these funds, Balyasny Asset Management held the most valuable stake in Huntington Bancshares Incorporated (NASDAQ:HBAN), which was worth $33.1 million at the end of the first quarter. On the second spot was White Elm Capital which amassed $15.7 million worth of shares. Moreover, Stelliam Investment Management, GLG Partners, and EJF Capital were also bullish on Huntington Bancshares Incorporated (NASDAQ:HBAN), allocating a large percentage of their portfolios to this stock.

Seeing as Huntington Bancshares Incorporated (NASDAQ:HBAN) has witnessed a decline in interest from hedge fund managers, it's easy to see that there is a sect of funds who were dropping their positions entirely by the end of the third quarter. At the top of the heap, Israel Englander's Millennium Management cut the largest position of all the hedgies monitored by Insider Monkey, worth close to $12 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also said goodbye to its stock, about $6.2 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's check out hedge fund activity in other stocks similar to Huntington Bancshares Incorporated (NASDAQ:HBAN). These stocks are WPP plc (NYSE:WPP), STMicroelectronics N.V. (NYSE:STM), The J.M. Smucker Company (NYSE:SJM), and Telecom Italia S.p.A. (NYSE:TI). This group of stocks' market values are similar to HBAN's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WPP,11,52078,0 STM,14,120394,3 SJM,26,574357,6 TI,1,4809,-2 Average,13,187910,1.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $100 million in HBAN's case. The J.M. Smucker Company (NYSE:SJM) is the most popular stock in this table. On the other hand Telecom Italia S.p.A. (NYSE:TI) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Huntington Bancshares Incorporated (NASDAQ:HBAN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on HBAN as the stock returned 2.1% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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