The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Goosehead Insurance, Inc. (NASDAQ:GSHD) and determine whether the smart money was really smart about this stock.
Is Goosehead Insurance, Inc. (NASDAQ:GSHD) ready to rally soon? Money managers were becoming more confident. The number of bullish hedge fund positions moved up by 2 in recent months. Our calculations also showed that GSHD 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). GSHD was in 11 hedge funds' portfolios at the end of March. There were 9 hedge funds in our database with GSHD holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most traders, hedge funds are seen as unimportant, outdated financial tools of the past. While there are greater than 8000 funds with their doors open at the moment, Our researchers look at the crème de la crème of this club, around 850 funds. These money managers direct the lion's share of all hedge funds' total capital, and by shadowing their top stock picks, Insider Monkey has uncovered numerous investment strategies that have historically outpaced the broader indices. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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Richard Driehaus of Driehaus Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a glance at the new hedge fund action regarding Goosehead Insurance, Inc. (NASDAQ:GSHD).
How have hedgies been trading Goosehead Insurance, Inc. (NASDAQ:GSHD)?
At Q1's end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards GSHD over the last 18 quarters. With hedge funds' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Zevenbergen Capital Investments held the most valuable stake in Goosehead Insurance, Inc. (NASDAQ:GSHD), which was worth $26.2 million at the end of the third quarter. On the second spot was Driehaus Capital which amassed $8.9 million worth of shares. Wildcat Capital Management, Akre Capital Management, and Highside Global Management 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 Highside Global Management allocated the biggest weight to Goosehead Insurance, Inc. (NASDAQ:GSHD), around 4.24% of its 13F portfolio. Wildcat Capital Management is also relatively very bullish on the stock, setting aside 3.85 percent of its 13F equity portfolio to GSHD.
Consequently, key hedge funds have jumped into Goosehead Insurance, Inc. (NASDAQ:GSHD) headfirst. Highside Global Management, managed by Zach Petrone, initiated the biggest position in Goosehead Insurance, Inc. (NASDAQ:GSHD). Highside Global Management had $7 million invested in the company at the end of the quarter. Renaissance Technologies also made a $0.9 million investment in the stock during the quarter. The only other fund with a new position in the stock is Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's go over hedge fund activity in other stocks similar to Goosehead Insurance, Inc. (NASDAQ:GSHD). We will take a look at Alliance Data Systems Corporation (NYSE:ADS), Plexus Corp. (NASDAQ:PLXS), Turning Point Therapeutics, Inc. (NASDAQ:TPTX), and PriceSmart, Inc. (NASDAQ:PSMT). This group of stocks' market valuations resemble GSHD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADS,30,245871,-15 PLXS,16,63502,-8 TPTX,19,360455,-4 PSMT,11,35029,-7 Average,19,176214,-8.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $176 million. That figure was $63 million in GSHD's case. Alliance Data Systems Corporation (NYSE:ADS) is the most popular stock in this table. On the other hand PriceSmart, Inc. (NASDAQ:PSMT) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Goosehead Insurance, Inc. (NASDAQ:GSHD) is even less popular than PSMT. Hedge funds clearly dropped the ball on GSHD as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on GSHD as the stock returned 68.4% in the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.