We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Robert Half International Inc. (NYSE:RHI) and determine whether hedge funds skillfully traded this stock.
Robert Half International Inc. (NYSE:RHI) shareholders have witnessed an increase in enthusiasm from smart money recently. Our calculations also showed that RHI 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.
If you'd ask most investors, hedge funds are assumed to be slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation at present, Our experts hone in on the bigwigs of this group, about 850 funds. It is estimated that this group of investors direct the lion's share of all hedge funds' total capital, and by shadowing their inimitable investments, Insider Monkey has unearthed numerous investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_338852" align="aligncenter" width="396"] Richard S. Pzena of Pzena Investment Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Now let's view the latest hedge fund action encompassing Robert Half International Inc. (NYSE:RHI).
How are hedge funds trading Robert Half International Inc. (NYSE:RHI)?
At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in RHI over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of Robert Half International Inc. (NYSE:RHI), with a stake worth $175.5 million reported as of the end of September. Trailing AQR Capital Management was Renaissance Technologies, which amassed a stake valued at $18.8 million. Royce & Associates, Citadel Investment Group, and Gotham Asset Management 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 AQR Capital Management allocated the biggest weight to Robert Half International Inc. (NYSE:RHI), around 0.3% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, setting aside 0.21 percent of its 13F equity portfolio to RHI.
As one would reasonably expect, some big names were breaking ground themselves. Carlson Capital, managed by Clint Carlson, created the most valuable position in Robert Half International Inc. (NYSE:RHI). Carlson Capital had $4.9 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also initiated a $0.9 million position during the quarter. The other funds with new positions in the stock are Richard S. Pzena's Pzena Investment Management, Greg Eisner's Engineers Gate Manager, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors.
Let's go over hedge fund activity in other stocks similar to Robert Half International Inc. (NYSE:RHI). These stocks are Flowers Foods, Inc. (NYSE:FLO), National Instruments Corporation (NASDAQ:NATI), MDU Resources Group Inc (NYSE:MDU), and Science Applications International Corp (NYSE:SAIC). This group of stocks' market values match RHI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FLO,27,227639,7 NATI,29,706256,-1 MDU,25,183156,-5 SAIC,34,371964,7 Average,28.75,372254,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $372 million. That figure was $247 million in RHI's case. Science Applications International Corp (NYSE:SAIC) is the most popular stock in this table. On the other hand MDU Resources Group Inc (NYSE:MDU) is the least popular one with only 25 bullish hedge fund positions. Robert Half International Inc. (NYSE:RHI) is not the least popular stock in this group but hedge fund interest is still below average. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on RHI as the stock returned 40.9% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.