Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That's why we pay special attention to hedge fund activity in these stocks.
Is Insight Enterprises, Inc. (NASDAQ:NSIT) ready to rally soon? Investors who are in the know are getting less optimistic. The number of long hedge fund positions fell by 4 recently. Our calculations also showed that nsit isn't among the 30 most popular stocks among hedge funds. NSIT was in 17 hedge funds' portfolios at the end of March. There were 21 hedge funds in our database with NSIT holdings at the end of the previous quarter.
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.
Let's take a peek at the fresh hedge fund action surrounding Insight Enterprises, Inc. (NASDAQ:NSIT).
How are hedge funds trading Insight Enterprises, Inc. (NASDAQ:NSIT)?
Heading into the second quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NSIT over the last 15 quarters. 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 Insight Enterprises, Inc. (NASDAQ:NSIT) was held by Royce & Associates, which reported holding $26 million worth of stock at the end of March. It was followed by Pzena Investment Management with a $22.6 million position. Other investors bullish on the company included Arrowstreet Capital, GLG Partners, and AQR Capital Management.
Because Insight Enterprises, Inc. (NASDAQ:NSIT) has witnessed falling interest from hedge fund managers, we can see that there lies a certain "tier" of funds that slashed their positions entirely last quarter. It's worth mentioning that Brandon Haley's Holocene Advisors dumped the biggest position of all the hedgies tracked by Insider Monkey, totaling an estimated $0.5 million in stock, and Jim Simons's Renaissance Technologies was right behind this move, as the fund dumped about $0.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Insight Enterprises, Inc. (NASDAQ:NSIT) but similarly valued. These stocks are Taylor Morrison Home Corp (NYSE:TMHC), Atlantica Yield plc (NASDAQ:AY), Inphi Corporation (NYSE:IPHI), and Oasis Petroleum Inc. (NYSE:OAS). This group of stocks' market values are closest to NSIT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TMHC,12,184668,-3 AY,21,239050,-1 IPHI,21,164662,0 OAS,27,276839,-4 Average,20.25,216305,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $216 million. That figure was $119 million in NSIT's case. Oasis Petroleum Inc. (NYSE:OAS) is the most popular stock in this table. On the other hand Taylor Morrison Home Corp (NYSE:TMHC) is the least popular one with only 12 bullish hedge fund positions. Insight Enterprises, Inc. (NASDAQ:NSIT) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately NSIT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NSIT investors were disappointed as the stock returned 3.3% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.