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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Insperity Inc (NYSE:NSP).
Is Insperity Inc (NYSE:NSP) a healthy stock for your portfolio? Investors who are in the know were turning less bullish. The number of long hedge fund positions dropped by 5 lately. Insperity Inc (NYSE:NSP) was in 20 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 29. Our calculations also showed that NSP isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
If you'd ask most shareholders, hedge funds are viewed as worthless, old investment tools of the past. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the bigwigs of this group, about 850 funds. These investment experts shepherd the lion's share of the smart money's total capital, and by watching their best equity investments, Insider Monkey has spotted several investment strategies that have historically outrun Mr. Market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Larry Robbins of Glenview Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Now let's analyze the recent hedge fund action encompassing Insperity Inc (NYSE:NSP).
Do Hedge Funds Think NSP Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in NSP over the last 23 quarters. So, let's find 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 Lakewood Capital Management, which reported holding $62.3 million worth of stock at the end of December. It was followed by Glenview Capital with a $31.5 million position. Other investors bullish on the company included Sunriver Management, Value Holdings LP, and No Street Capital. In terms of the portfolio weights assigned to each position Value Holdings LP allocated the biggest weight to Insperity Inc (NYSE:NSP), around 4.47% of its 13F portfolio. Sunriver Management is also relatively very bullish on the stock, setting aside 4.09 percent of its 13F equity portfolio to NSP.
Since Insperity Inc (NYSE:NSP) has witnessed bearish sentiment from hedge fund managers, it's safe to say that there lies a certain "tier" of funds who sold off their full holdings in the first quarter. It's worth mentioning that Paul Tudor Jones's Tudor Investment Corp dropped the biggest position of the 750 funds watched by Insider Monkey, totaling close to $2.2 million in stock, and Chuck Royce's Royce & Associates was right behind this move, as the fund dropped about $2 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 5 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to Insperity Inc (NYSE:NSP). These stocks are Colony Capital Inc (NYSE:CLNY), Pebblebrook Hotel Trust (NYSE:PEB), Option Care Health, Inc. (NASDAQ:OPCH), Walker & Dunlop Inc. (NYSE:WD), FibroGen Inc (NASDAQ:FGEN), Bandwidth Inc. (NASDAQ:BAND), and Outfront Media Inc. (REIT) (NYSE:OUT). This group of stocks' market values are similar to NSP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLNY,25,592790,4 PEB,10,48298,-6 OPCH,31,373980,7 WD,19,110380,0 FGEN,18,246707,-3 BAND,24,267634,-7 OUT,41,745537,3 Average,24,340761,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $341 million. That figure was $227 million in NSP's case. Outfront Media Inc. (REIT) (NYSE:OUT) is the most popular stock in this table. On the other hand Pebblebrook Hotel Trust (NYSE:PEB) is the least popular one with only 10 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. Our overall hedge fund sentiment score for NSP is 36.8. 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 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 23.8% in 2021 through July 16th and beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on NSP, though not to the same extent, as the stock returned 11.4% since the end of Q1 (through July 16th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.