With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was inTEST Corporation (NASDAQ:INTT).
inTEST Corporation (NASDAQ:INTT) investors should be aware of a decrease in enthusiasm from smart money in recent months. inTEST Corporation (NASDAQ:INTT) was in 3 hedge funds' portfolios at the end of September. The all time high for this statistics is 8. Our calculations also showed that INTT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's take a look at the fresh hedge fund action regarding inTEST Corporation (NASDAQ:INTT).
How are hedge funds trading inTEST Corporation (NASDAQ:INTT)?
At third quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2020. On the other hand, there were a total of 4 hedge funds with a bullish position in INTT 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.
More specifically, Renaissance Technologies was the largest shareholder of inTEST Corporation (NASDAQ:INTT), with a stake worth $3.6 million reported as of the end of September. Trailing Renaissance Technologies was Juniper Investment Company, which amassed a stake valued at $1.8 million. Arrowstreet Capital was 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 Juniper Investment Company allocated the biggest weight to inTEST Corporation (NASDAQ:INTT), around 1.93% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0036 percent of its 13F equity portfolio to INTT.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Nokomis Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified INTT as a viable investment and initiated a position in the stock.
Let's also examine hedge fund activity in other stocks similar to inTEST Corporation (NASDAQ:INTT). These stocks are SilverBow Resorces, Inc. (NYSE:SBOW), SCYNEXIS Inc (NASDAQ:SCYX), TESSCO Technologies, Inc. (NASDAQ:TESS), SEACOR Marine Holdings Inc. (NYSE:SMHI), RealNetworks Inc (NASDAQ:RNWK), SRAX, Inc. (NASDAQ:SRAX), and The LGL Group, Inc. (NYSE:LGL). This group of stocks' market valuations match INTT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SBOW,6,19383,-1 SCYX,3,2731,-4 TESS,3,3818,-4 SMHI,2,1341,-2 RNWK,4,6790,-1 SRAX,2,159,1 LGL,4,7816,-1 Average,3.4,6005,-1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.4 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $6 million in INTT's case. SilverBow Resorces, Inc. (NYSE:SBOW) is the most popular stock in this table. On the other hand SEACOR Marine Holdings Inc. (NYSE:SMHI) is the least popular one with only 2 bullish hedge fund positions. inTEST Corporation (NASDAQ:INTT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for INTT is 27.8. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on INTT as the stock returned 15.6% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.