Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors' consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by more than 6 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Robert Half International Inc. (NYSE:RHI) from the perspective of those elite funds.
Robert Half International Inc. (NYSE:RHI) has seen a decrease in hedge fund sentiment of late. RHI was in 25 hedge funds' portfolios at the end of the first quarter of 2019. There were 26 hedge funds in our database with RHI holdings at the end of the previous quarter. Our calculations also showed that rhi isn't among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
Let's review the new hedge fund action surrounding Robert Half International Inc. (NYSE:RHI).
How are hedge funds trading Robert Half International Inc. (NYSE:RHI)?
At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RHI over the last 15 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Robert Half International Inc. (NYSE:RHI). AQR Capital Management has a $434.8 million position in the stock, comprising 0.5% of its 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which holds a $50.9 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish consist of Jim Simons's Renaissance Technologies, John Overdeck and David Siegel's Two Sigma Advisors and Ken Griffin's Citadel Investment Group.
Due to the fact that Robert Half International Inc. (NYSE:RHI) has experienced bearish sentiment from hedge fund managers, logic holds that there exists a select few hedgies that elected to cut their entire stakes in the third quarter. It's worth mentioning that Sander Gerber's Hudson Bay Capital Management dumped the biggest stake of the 700 funds followed by Insider Monkey, valued at an estimated $1.1 million in call options. Matthew Hulsizer's fund, PEAK6 Capital Management, also said goodbye to its call options, about $0.4 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds in the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Robert Half International Inc. (NYSE:RHI) but similarly valued. We will take a look at PulteGroup, Inc. (NYSE:PHM), Hyatt Hotels Corporation (NYSE:H), Kilroy Realty Corp (NYSE:KRC), and Pentair plc (NYSE:PNR). This group of stocks' market valuations match RHI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PHM,25,739765,1 H,24,761564,-1 KRC,11,140109,-2 PNR,28,675196,3 Average,22,579159,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $579 million. That figure was $643 million in RHI's case. Pentair plc (NYSE:PNR) is the most popular stock in this table. On the other hand Kilroy Realty Corp (NYSE:KRC) is the least popular one with only 11 bullish hedge fund positions. Robert Half International Inc. (NYSE:RHI) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately RHI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on RHI were disappointed as the stock returned -15% during the same 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.