At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards The Hackett Group, Inc. (NASDAQ:HCKT).
The Hackett Group, Inc. (NASDAQ:HCKT) investors should be aware of an increase in support from the world's most elite money managers lately. Our calculations also showed that HCKT 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.
[caption id="attachment_845793" align="aligncenter" width="395"] Peter Rathjens of Arrowstreet Capital[/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. With all of this in mind let's analyze the key hedge fund action regarding The Hackett Group, Inc. (NASDAQ:HCKT).
How are hedge funds trading The Hackett Group, Inc. (NASDAQ:HCKT)?
At Q1's end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HCKT over the last 18 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Trigran Investments held the most valuable stake in The Hackett Group, Inc. (NASDAQ:HCKT), which was worth $28.9 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $17.6 million worth of shares. Hosking Partners, AQR Capital Management, and Royce & Associates 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 Trigran Investments allocated the biggest weight to The Hackett Group, Inc. (NASDAQ:HCKT), around 6.35% of its 13F portfolio. AltraVue Capital is also relatively very bullish on the stock, designating 0.83 percent of its 13F equity portfolio to HCKT.
As aggregate interest increased, key money managers have jumped into The Hackett Group, Inc. (NASDAQ:HCKT) headfirst. Engineers Gate Manager, managed by Greg Eisner, initiated the most outsized position in The Hackett Group, Inc. (NASDAQ:HCKT). Engineers Gate Manager had $0.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new HCKT position is Mike Vranos's Ellington.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as The Hackett Group, Inc. (NASDAQ:HCKT) but similarly valued. We will take a look at AnaptysBio, Inc. (NASDAQ:ANAB), The Marcus Corporation (NYSE:MCS), Par Pacific Holdings, Inc. (NYSE:PARR), and Independence Holding Company (NYSE:IHC). All of these stocks' market caps match HCKT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ANAB,25,231710,-2 MCS,14,19830,-1 PARR,18,48678,0 IHC,2,13618,-3 Average,14.75,78459,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $88 million in HCKT's case. AnaptysBio, Inc. (NASDAQ:ANAB) is the most popular stock in this table. On the other hand Independence Holding Company (NYSE:IHC) is the least popular one with only 2 bullish hedge fund positions. The Hackett Group, Inc. (NASDAQ:HCKT) 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 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately HCKT wasn't nearly as popular as these 10 stocks and hedge funds that were betting on HCKT were disappointed as the stock returned 8.3% 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.
Disclosure: None. This article was originally published at Insider Monkey.