While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding HeadHunter Group PLC (NASDAQ:HHR).
HeadHunter Group PLC (NASDAQ:HHR) has experienced an increase in support from the world's most elite money managers in recent months. HeadHunter Group PLC (NASDAQ:HHR) was in 8 hedge funds' portfolios at the end of September. The all time high for this statistics is 12. There were 5 hedge funds in our database with HHR holdings at the end of June. Our calculations also showed that HHR 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most market participants, hedge funds are seen as unimportant, old financial vehicles of years past. While there are greater than 8000 funds in operation at the moment, Our experts hone in on the moguls of this club, approximately 850 funds. Most estimates calculate that this group of people handle the majority of all hedge funds' total capital, and by observing their matchless stock picks, Insider Monkey has uncovered various investment strategies that have historically beaten Mr. Market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Paul Marshall of Marshall Wace
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 15 best blue chip stocks 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's take a look at the new hedge fund action encompassing HeadHunter Group PLC (NASDAQ:HHR).
How are hedge funds trading HeadHunter Group PLC (NASDAQ:HHR)?
Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 60% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in HHR a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, Cat Rock Capital held the most valuable stake in HeadHunter Group PLC (NASDAQ:HHR), which was worth $7.2 million at the end of the third quarter. On the second spot was Millennium Management which amassed $3.8 million worth of shares. Renaissance Technologies, Marshall Wace LLP, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cat Rock Capital allocated the biggest weight to HeadHunter Group PLC (NASDAQ:HHR), around 0.74% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to HHR.
As aggregate interest increased, key hedge funds were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the largest position in HeadHunter Group PLC (NASDAQ:HHR). Marshall Wace LLP had $2.1 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $0.8 million position during the quarter. The other funds with brand new HHR positions are Ken Griffin's Citadel Investment Group and Paul Tudor Jones's Tudor Investment Corp.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as HeadHunter Group PLC (NASDAQ:HHR) but similarly valued. These stocks are Delek Logistics Partners LP (NYSE:DKL), 360 DigiTech, Inc. (NASDAQ:QFIN), Retail Opportunity Investments Corp (NASDAQ:ROIC), Talend S.A. (NASDAQ:TLND), Astec Industries, Inc. (NASDAQ:ASTE), Zuora, Inc. (NYSE:ZUO), and Phreesia, Inc. (NYSE:PHR). This group of stocks' market caps match HHR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DKL,1,2964,0 QFIN,15,49651,3 ROIC,19,53660,-1 TLND,28,587292,0 ASTE,15,99097,5 ZUO,23,130724,2 PHR,22,126830,2 Average,17.6,150031,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.6 hedge funds with bullish positions and the average amount invested in these stocks was $150 million. That figure was $18 million in HHR's case. Talend S.A. (NASDAQ:TLND) is the most popular stock in this table. On the other hand Delek Logistics Partners LP (NYSE:DKL) is the least popular one with only 1 bullish hedge fund positions. HeadHunter Group PLC (NASDAQ:HHR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HHR is 41. 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. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately HHR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HHR investors were disappointed as the stock returned 2.2% since the end of September (through 12/2) 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 in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.