Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees during the first half of 2019 amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the second quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Insperity Inc (NYSE:NSP).
Insperity Inc (NYSE:NSP) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 24 hedge funds' portfolios at the end of the second quarter of 2019. At the end of this article we will also compare NSP to other stocks including Ascendis Pharma A/S (NASDAQ:ASND), New Relic Inc (NYSE:NEWR), and Acuity Brands, Inc. (NYSE:AYI) to get a better sense of its popularity.
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.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a gander at the key hedge fund action encompassing Insperity Inc (NYSE:NSP).
How have hedgies been trading Insperity Inc (NYSE:NSP)?
Heading into the third quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in NSP 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 Insperity Inc (NYSE:NSP) was held by AQR Capital Management, which reported holding $109.8 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $60.4 million position. Other investors bullish on the company included GLG Partners, Marshall Wace LLP, and Citadel Investment Group.
Due to the fact that Insperity Inc (NYSE:NSP) has witnessed bearish sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of fund managers that elected to cut their positions entirely in the second quarter. Interestingly, Andrew Feldstein and Stephen Siderow's Blue Mountain Capital dropped the largest stake of the 750 funds monitored by Insider Monkey, valued at about $5.4 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also sold off its stock, about $1.9 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to Insperity Inc (NYSE:NSP). We will take a look at Ascendis Pharma A/S (NASDAQ:ASND), New Relic Inc (NYSE:NEWR), Acuity Brands, Inc. (NYSE:AYI), and Grupo Televisa SAB (NYSE:TV). All of these stocks' market caps resemble NSP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASND,33,2602951,-2 NEWR,29,278012,2 AYI,23,928702,-6 TV,18,719110,2 Average,25.75,1132194,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $1132 million. That figure was $391 million in NSP's case. Ascendis Pharma A/S (NASDAQ:ASND) is the most popular stock in this table. On the other hand Grupo Televisa SAB (NYSE:TV) is the least popular one with only 18 bullish hedge fund positions. Insperity Inc (NYSE:NSP) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately NSP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NSP investors were disappointed as the stock returned -19% during the third 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 (view the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.