Hedge Funds Are Betting On StarTek, Inc. (SRT)
In this article you are going to find out whether hedge funds think StarTek, Inc. (NYSE:SRT) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is StarTek, Inc. (NYSE:SRT) a great investment now? Hedge funds were buying. The number of long hedge fund bets increased by 1 recently. StarTek, Inc. (NYSE:SRT) was in 4 hedge funds' portfolios at the end of March. The all time high for this statistic is 7. Our calculations also showed that SRT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 3 hedge funds in our database with SRT positions at the end of the fourth quarter.
Today there are numerous formulas investors put to use to assess publicly traded companies. Two of the most innovative formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass their index-focused peers by a significant amount (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 .
Israel Englander of Millennium Management
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. Keeping this in mind we're going to take a look at the key hedge fund action regarding StarTek, Inc. (NYSE:SRT).
Do Hedge Funds Think SRT Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SRT over the last 23 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the number one position in StarTek, Inc. (NYSE:SRT), worth close to $7.1 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $0.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that hold long positions consist of Israel Englander's Millennium Management, Greg Eisner's Engineers Gate Manager and . In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to StarTek, Inc. (NYSE:SRT), around 0.01% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to SRT.
Now, key money managers have jumped into StarTek, Inc. (NYSE:SRT) headfirst. Engineers Gate Manager, managed by Greg Eisner, established the largest position in StarTek, Inc. (NYSE:SRT). Engineers Gate Manager had $0.1 million invested in the company at the end of the quarter.
Let's check out hedge fund activity in other stocks similar to StarTek, Inc. (NYSE:SRT). These stocks are Northern Dynasty Minerals Ltd. (NYSE:NAK), Greenhill & Co., Inc. (NYSE:GHL), Gladstone Capital Corporation (NASDAQ:GLAD), Forian Inc. (NASDAQ:FORA), CorMedix Inc. (NASDAQ:CRMD), The First Bancorp, Inc. (NASDAQ:FNLC), and Pure Cycle Corporation (NASDAQ:PCYO). All of these stocks' market caps resemble SRT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NAK,7,17841,2 GHL,13,29988,7 GLAD,5,1917,-1 FORA,2,1761,2 CRMD,3,17555,-3 FNLC,1,4384,0 PCYO,10,69664,1 Average,5.9,20444,1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.9 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $8 million in SRT's case. Greenhill & Co., Inc. (NYSE:GHL) is the most popular stock in this table. On the other hand The First Bancorp, Inc. (NASDAQ:FNLC) is the least popular one with only 1 bullish hedge fund positions. StarTek, Inc. (NYSE:SRT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SRT is 35.6. 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 negative signal and 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 surpassed the market again by 3.3 percentage points. Unfortunately SRT wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SRT investors were disappointed as the stock returned -1.9% 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
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