At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of June 28. In this article, we will use that wealth of knowledge to determine whether or not Quotient Technology Inc (NYSE:QUOT) makes for a good investment right now.
Quotient Technology Inc (NYSE:QUOT) shareholders have witnessed a decrease in support from the world's most elite money managers of late. Our calculations also showed that QUOT isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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. Let's go over the recent hedge fund action regarding Quotient Technology Inc (NYSE:QUOT).
What have hedge funds been doing with Quotient Technology Inc (NYSE:QUOT)?
At the end of the second quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the first quarter of 2019. On the other hand, there were a total of 17 hedge funds with a bullish position in QUOT a year ago. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Quotient Technology Inc (NYSE:QUOT) was held by Miller Value Partners, which reported holding $77.6 million worth of stock at the end of March. It was followed by Rima Senvest Management with a $69.1 million position. Other investors bullish on the company included P2 Capital Partners, D E Shaw, and Trigran Investments.
Since Quotient Technology Inc (NYSE:QUOT) has witnessed a decline in interest from the smart money, logic holds that there exists a select few money managers who sold off their full holdings last quarter. At the top of the heap, Joseph Edelman's Perceptive Advisors sold off the biggest position of the 750 funds tracked by Insider Monkey, comprising close to $97.2 million in stock. Ken Griffin's fund, Citadel Investment Group, also said goodbye to its stock, about $3.3 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 3 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to Quotient Technology Inc (NYSE:QUOT). These stocks are Chase Corporation (NYSEAMEX:CCF), NV5 Holdings Inc (NASDAQ:NVEE), Kelly Services, Inc. (NASDAQ:KELYA), and Endo International plc (NASDAQ:ENDP). This group of stocks' market valuations are similar to QUOT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CCF,8,84745,-1 NVEE,12,30332,2 KELYA,10,23858,-3 ENDP,21,252668,2 Average,12.75,97901,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $226 million in QUOT's case. Endo International plc (NASDAQ:ENDP) is the most popular stock in this table. On the other hand Chase Corporation (NYSEAMEX:CCF) is the least popular one with only 8 bullish hedge fund positions. Quotient Technology Inc (NYSE:QUOT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 QUOT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on QUOT were disappointed as the stock returned -27.2% 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 among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.