Is Heidrick & Struggles International, Inc. (NASDAQ:HSII) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Heidrick & Struggles International, Inc. (NASDAQ:HSII) has experienced a decrease in activity from the world's largest hedge funds in recent months. Our calculations also showed that HSII isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to 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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a glance at the new hedge fund action regarding Heidrick & Struggles International, Inc. (NASDAQ:HSII).
How have hedgies been trading Heidrick & Struggles International, Inc. (NASDAQ:HSII)?
At Q2's end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -28% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in HSII a year ago. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the number one position in Heidrick & Struggles International, Inc. (NASDAQ:HSII). Renaissance Technologies has a $36.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which holds a $27.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Noam Gottesman's GLG Partners, Cliff Asness's AQR Capital Management and D. E. Shaw's D E Shaw.
Seeing as Heidrick & Struggles International, Inc. (NASDAQ:HSII) has faced falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of money managers that slashed their full holdings by the end of the second quarter. Interestingly, Israel Englander's Millennium Management said goodbye to the largest position of the "upper crust" of funds monitored by Insider Monkey, valued at an estimated $5.9 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund said goodbye to about $3.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 5 funds by the end of the second quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Heidrick & Struggles International, Inc. (NASDAQ:HSII) but similarly valued. We will take a look at Crossamerica Partners LP (NYSE:CAPL), GameStop Corp. (NYSE:GME), Rosetta Stone Inc (NYSE:RST), and Antares Pharma Inc (NASDAQ:ATRS). This group of stocks' market caps resemble HSII's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CAPL,1,6327,-3 GME,27,117149,0 RST,12,110982,-7 ATRS,10,32726,-2 Average,12.5,66796,-3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $105 million in HSII's case. GameStop Corp. (NYSE:GME) is the most popular stock in this table. On the other hand Crossamerica Partners LP (NYSE:CAPL) is the least popular one with only 1 bullish hedge fund positions. Heidrick & Struggles International, Inc. (NASDAQ:HSII) 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HSII wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HSII were disappointed as the stock returned -8.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 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.