The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Exponent, Inc. (NASDAQ:EXPO) based on those filings.
Exponent, Inc. (NASDAQ:EXPO) has seen an increase in hedge fund sentiment recently. EXPO was in 18 hedge funds' portfolios at the end of September. There were 15 hedge funds in our database with EXPO positions at the end of the previous quarter. Our calculations also showed that EXPO isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_69704" align="aligncenter" width="450"] Andrew Sandler of Sandler Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to go over the new hedge fund action surrounding Exponent, Inc. (NASDAQ:EXPO).
Hedge fund activity in Exponent, Inc. (NASDAQ:EXPO)
At Q3's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the second quarter of 2019. On the other hand, there were a total of 12 hedge funds with a bullish position in EXPO a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Exponent, Inc. (NASDAQ:EXPO), which was worth $39 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $20.3 million worth of shares. Sandler Capital Management, Two Sigma Advisors, and GLG Partners 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 Sandler Capital Management allocated the biggest weight to Exponent, Inc. (NASDAQ:EXPO), around 1.77% of its 13F portfolio. Noked Capital is also relatively very bullish on the stock, setting aside 0.37 percent of its 13F equity portfolio to EXPO.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the biggest position in Exponent, Inc. (NASDAQ:EXPO). Millennium Management had $3.7 million invested in the company at the end of the quarter. Brad Dunkley and Blair Levinsky's Waratah Capital Advisors also initiated a $1.1 million position during the quarter. The other funds with new positions in the stock are Donald Sussman's Paloma Partners, Roy Vermus and Shlomi Bracha's Noked Capital, and Michael Gelband's ExodusPoint Capital.
Let's check out hedge fund activity in other stocks similar to Exponent, Inc. (NASDAQ:EXPO). These stocks are J&J Snack Foods Corp. (NASDAQ:JJSF), Umpqua Holdings Corp (NASDAQ:UMPQ), Valley National Bancorp (NASDAQ:VLY), and Blueprint Medicines Corporation (NASDAQ:BPMC). This group of stocks' market caps resemble EXPO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JJSF,17,132052,4 UMPQ,20,140686,0 VLY,15,13438,4 BPMC,26,707543,-1 Average,19.5,248430,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $248 million. That figure was $115 million in EXPO's case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand Valley National Bancorp (NASDAQ:VLY) is the least popular one with only 15 bullish hedge fund positions. Exponent, Inc. (NASDAQ:EXPO) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately EXPO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EXPO investors were disappointed as the stock returned -9.1% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.