Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 15 S&P 500 stocks among hedge funds at the end of December 2018 yielded an average return of 19.7% year-to-date, vs. a gain of 13.1% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Quotient Limited (NASDAQ:QTNT).
Quotient Limited (NASDAQ:QTNT) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds' portfolios at the end of December. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as New Frontier Corp (NYSE:NFC), U.S. Lime & Minerals Inc. (NASDAQ:USLM), and Veritiv Corp (NYSE:VRTV) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? 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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to analyze the latest hedge fund action regarding Quotient Limited (NASDAQ:QTNT).
What have hedge funds been doing with Quotient Limited (NASDAQ:QTNT)?
At the end of the fourth quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in QTNT a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Quotient Limited (NASDAQ:QTNT) was held by Perceptive Advisors, which reported holding $66 million worth of stock at the end of December. It was followed by Polar Capital with a $35.5 million position. Other investors bullish on the company included Cormorant Asset Management, Highbridge Capital Management, and Farallon Capital.
Since Quotient Limited (NASDAQ:QTNT) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there was a specific group of funds that slashed their full holdings last quarter. Intriguingly, Ken Griffin's Citadel Investment Group dropped the biggest investment of the "upper crust" of funds followed by Insider Monkey, worth an estimated $0.7 million in stock. Michael Platt and William Reeves's fund, BlueCrest Capital Mgmt., also sold off its stock, about $0.6 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to Quotient Limited (NASDAQ:QTNT). These stocks are New Frontier Corp (NYSE:NFC), U.S. Lime & Minerals Inc. (NASDAQ:USLM), Veritiv Corp (NYSE:VRTV), and Farmer Brothers Co. (NASDAQ:FARM). This group of stocks' market caps resemble QTNT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NFC,14,67411,-1 USLM,2,16994,-2 VRTV,10,99081,-3 FARM,9,88819,2 Average,8.75,68076,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $203 million in QTNT's case. New Frontier Corp (NYSE:NFC) is the most popular stock in this table. On the other hand U.S. Lime & Minerals Inc. (NASDAQ:USLM) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Quotient Limited (NASDAQ:QTNT) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on QTNT as the stock returned 32.8% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.