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Last year we predicted the arrival of the first US recession since 2009 and we told in advance 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 Support.com, Inc. (NASDAQ:SPRT).
Hedge fund interest in Support.com, Inc. (NASDAQ:SPRT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SPRT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare SPRT to other stocks including Perma-Fix Environmental Services, Inc. (NASDAQ:PESI), Global Internet of People, Inc. (NASDAQ:SDH), and Elys Game Technology, Corp. (NASDAQ:ELYS) to get a better sense of its popularity.
In the 21st century investor’s toolkit there are dozens of indicators investors employ to assess publicly traded companies. A couple of the less utilized indicators are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the top fund managers can beat the broader indices by a superb margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Jim Simons of Renaissance Technologies
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to review the new hedge fund action regarding Support.com, Inc. (NASDAQ:SPRT).
Do Hedge Funds Think SPRT Is A Good Stock To Buy Now?
At Q1's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SPRT over the last 23 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies has the number one position in Support.com, Inc. (NASDAQ:SPRT), worth close to $3.8 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $0.9 million call position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions consist of Brett Hendrickson's Nokomis Capital, Thomas Bailard's Bailard Inc and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Nokomis Capital allocated the biggest weight to Support.com, Inc. (NASDAQ:SPRT), around 0.2% of its 13F portfolio. Bailard Inc is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to SPRT.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Minerva Advisors. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Support.com, Inc. (NASDAQ:SPRT) but similarly valued. These stocks are Perma-Fix Environmental Services, Inc. (NASDAQ:PESI), Global Internet of People, Inc. (NASDAQ:SDH), Elys Game Technology, Corp. (NASDAQ:ELYS), Excellon Resources Inc. (NYSE:EXN), Synthetic Biologics Inc (NYSE:SYN), Advaxis, Inc. (NASDAQ:ADXS), and Houston Wire & Cable Company (NASDAQ:HWCC). This group of stocks' market values are similar to SPRT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PESI,2,2623,0 SDH,1,83,1 ELYS,2,266,-1 EXN,1,79,0 SYN,3,1110,1 ADXS,2,2220,0 HWCC,7,22249,1 Average,2.6,4090,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.6 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $5 million in SPRT's case. Houston Wire & Cable Company (NASDAQ:HWCC) is the most popular stock in this table. On the other hand Global Internet of People, Inc. (NASDAQ:SDH) is the least popular one with only 1 bullish hedge fund positions. Support.com, Inc. (NASDAQ:SPRT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SPRT is 45. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately SPRT wasn't nearly as popular as these 5 stocks and hedge funds that were betting on SPRT were disappointed as the stock returned -10.9% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.