In this article we will take a look at whether hedge funds think Exponent, Inc. (NASDAQ:EXPO) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Exponent, Inc. (NASDAQ:EXPO) 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 EXPO to other stocks including Skechers USA Inc (NYSE:SKX), SYNNEX Corporation (NYSE:SNX), and MAXIMUS, Inc. (NYSE:MMS) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_189632" align="aligncenter" width="400"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a glance at the fresh hedge fund action encompassing Exponent, Inc. (NASDAQ:EXPO).
What does smart money think about Exponent, Inc. (NASDAQ:EXPO)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EXPO over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Exponent, Inc. (NASDAQ:EXPO), which was worth $37.6 million at the end of the third quarter. On the second spot was Millennium Management which amassed $15.2 million worth of shares. Royce & Associates, Citadel Investment Group, and Winton Capital 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 Sandler Capital Management allocated the biggest weight to Exponent, Inc. (NASDAQ:EXPO), around 1.16% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, designating 0.32 percent of its 13F equity portfolio to EXPO.
Because Exponent, Inc. (NASDAQ:EXPO) has witnessed falling interest from the smart money, we can see that there lies a certain "tier" of hedgies who sold off their full holdings in the first quarter. It's worth mentioning that Michael Kharitonov and Jon David McAuliffe's Voleon Capital dumped the largest investment of the "upper crust" of funds watched by Insider Monkey, valued at an estimated $1.3 million in stock. Qing Li's fund, Sciencast Management, also sold off its stock, about $0.5 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Exponent, Inc. (NASDAQ:EXPO). These stocks are Skechers USA Inc (NYSE:SKX), SYNNEX Corporation (NYSE:SNX), MAXIMUS, Inc. (NYSE:MMS), and PS Business Parks Inc (NYSE:PSB). All of these stocks' market caps are closest to EXPO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SKX,26,485573,-4 SNX,24,263748,2 MMS,26,132535,2 PSB,17,83370,2 Average,23.25,241307,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $241 million. That figure was $121 million in EXPO's case. Skechers USA Inc (NYSE:SKX) is the most popular stock in this table. On the other hand PS Business Parks Inc (NYSE:PSB) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Exponent, Inc. (NASDAQ:EXPO) is even less popular than PSB. Hedge funds dodged a bullet by taking a bearish stance towards EXPO. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but managed to beat the market by 15.9 percentage points. Unfortunately EXPO wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); EXPO investors were disappointed as the stock returned 8.8% during the second quarter (through June 22nd) 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 most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.