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Insight Enterprises, Inc. (NSIT): Hedge Funds Are Nibbling

·6 min read

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Insight Enterprises, Inc. (NASDAQ:NSIT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Insight Enterprises, Inc. (NASDAQ:NSIT) shareholders have witnessed an increase in hedge fund interest recently. Insight Enterprises, Inc. (NASDAQ:NSIT) was in 19 hedge funds' portfolios at the end of June. The all time high for this statistic is 22. There were 17 hedge funds in our database with NSIT positions at the end of the first quarter. Our calculations also showed that NSIT isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

Now let's take a look at the fresh hedge fund action surrounding Insight Enterprises, Inc. (NASDAQ:NSIT).

Do Hedge Funds Think NSIT Is A Good Stock To Buy Now?

At the end of June, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in NSIT a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, ValueAct Capital held the most valuable stake in Insight Enterprises, Inc. (NASDAQ:NSIT), which was worth $284.4 million at the end of the second quarter. On the second spot was Royce & Associates which amassed $29.9 million worth of shares. Arrowstreet Capital, 13D Management, and Bailard Inc 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 ValueAct Capital allocated the biggest weight to Insight Enterprises, Inc. (NASDAQ:NSIT), around 3.4% of its 13F portfolio. 13D Management is also relatively very bullish on the stock, designating 2.56 percent of its 13F equity portfolio to NSIT.

Consequently, key money managers have jumped into Insight Enterprises, Inc. (NASDAQ:NSIT) headfirst. 13D Management, managed by Kenneth Squire, created the most outsized position in Insight Enterprises, Inc. (NASDAQ:NSIT). 13D Management had $7.5 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also made a $0.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Jinghua Yan's TwinBeech Capital, Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, and Mika Toikka's AlphaCrest Capital Management.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Insight Enterprises, Inc. (NASDAQ:NSIT) but similarly valued. We will take a look at Investors Bancorp, Inc. (NASDAQ:ISBC), Ameris Bancorp (NASDAQ:ABCB), Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), Triton International Limited (NYSE:TRTN), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), Helmerich & Payne, Inc. (NYSE:HP), and Rent-A-Center Inc (NASDAQ:RCII). All of these stocks' market caps are similar to NSIT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ISBC,15,53960,3 ABCB,15,89100,-1 KTOS,18,285414,2 TRTN,24,274512,-6 CBRL,28,144243,12 HP,15,133260,-6 RCII,29,385922,3 Average,20.6,195202,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $195 million. That figure was $368 million in NSIT's case. Rent-A-Center Inc (NASDAQ:RCII) is the most popular stock in this table. On the other hand Investors Bancorp, Inc. (NASDAQ:ISBC) is the least popular one with only 15 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. Our overall hedge fund sentiment score for NSIT is 47.2. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately NSIT wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); NSIT investors were disappointed as the stock returned -5.7% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.