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After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards The Hackett Group, Inc. (NASDAQ:HCKT).
Is HCKT a good stock to buy now? Hedge funds were cutting their exposure. The number of long hedge fund bets retreated by 2 in recent months. The Hackett Group, Inc. (NASDAQ:HCKT) was in 15 hedge funds' portfolios at the end of September. The all time high for this statistic is 20. Our calculations also showed that HCKT 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). There were 17 hedge funds in our database with HCKT positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
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. Keeping this in mind we're going to review the fresh hedge fund action surrounding The Hackett Group, Inc. (NASDAQ:HCKT).
Do Hedge Funds Think HCKT Is A Good Stock To Buy Now?
At Q3's end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HCKT over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings significantly (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 $27.2 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $18.9 million worth of shares. Hosking Partners, Royce & Associates, 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 Trigran Investments allocated the biggest weight to The Hackett Group, Inc. (NASDAQ:HCKT), around 4.93% of its 13F portfolio. AltraVue Capital is also relatively very bullish on the stock, dishing out 1.53 percent of its 13F equity portfolio to HCKT.
Due to the fact that The Hackett Group, Inc. (NASDAQ:HCKT) has faced declining sentiment from the smart money, we can see that there lies a certain "tier" of funds who sold off their full holdings heading into Q4. Interestingly, Roger Ibbotson's Zebra Capital Management dumped the largest investment of the 750 funds monitored by Insider Monkey, totaling about $0.3 million in stock, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors was right behind this move, as the fund dumped about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 2 funds heading into Q4.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as The Hackett Group, Inc. (NASDAQ:HCKT) but similarly valued. These stocks are Alerus Financial Corporation (NASDAQ:ALRS), Casa Systems, Inc. (NASDAQ:CASA), One Liberty Properties, Inc. (NYSE:OLP), Daily Journal Corporation (NASDAQ:DJCO), Cutera, Inc. (NASDAQ:CUTR), American Superconductor Corporation (NASDAQ:AMSC), and Zix Corporation (NASDAQ:ZIXI). This group of stocks' market valuations resemble HCKT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALRS,1,598,0 CASA,11,7479,2 OLP,7,22139,-1 DJCO,2,651,0 CUTR,19,79300,4 AMSC,8,47220,-3 ZIXI,7,17203,-9 Average,7.9,24941,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.9 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $85 million in HCKT's case. Cutera, Inc. (NASDAQ:CUTR) is the most popular stock in this table. On the other hand Alerus Financial Corporation (NASDAQ:ALRS) is the least popular one with only 1 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. Our overall hedge fund sentiment score for HCKT is 64.4. 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. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on HCKT as the stock returned 24.9% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.