Hedge funds don't get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don't realize is that 100% of the passive funds didn't see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March. In this article, we analyze how these elite funds and prominent investors traded HeadHunter Group PLC (NASDAQ:HHR) based on 4+ years of hedge fund filings.
HeadHunter Group PLC (NASDAQ:HHR) has seen a decrease in hedge fund sentiment in recent months. Our calculations also showed that HHR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Paul Marshall of Marshall Wace[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with high accuracy, so we check out his stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to go over the new hedge fund action surrounding HeadHunter Group PLC (NASDAQ:HHR).
What does smart money think about HeadHunter Group PLC (NASDAQ:HHR)?
At Q4's end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in HHR a year ago. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, holds the biggest position in HeadHunter Group PLC (NASDAQ:HHR). Scopia Capital has a $31.6 million position in the stock, comprising 2.4% of its 13F portfolio. Coming in second is Cat Rock Capital, led by Alexander Captain, holding a $27.1 million position; the fund has 3.8% of its 13F portfolio invested in the stock. Remaining peers that are bullish comprise Hugh Sloane's Sloane Robinson Investment Management, Israel Englander's Millennium Management and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Cat Rock Capital allocated the biggest weight to HeadHunter Group PLC (NASDAQ:HHR), around 3.81% of its 13F portfolio. Scopia Capital is also relatively very bullish on the stock, setting aside 2.45 percent of its 13F equity portfolio to HHR.
Judging by the fact that HeadHunter Group PLC (NASDAQ:HHR) has faced a decline in interest from hedge fund managers, we can see that there were a few fund managers who were dropping their entire stakes in the third quarter. At the top of the heap, Eric Bannasch's Cadian Capital said goodbye to the largest stake of all the hedgies followed by Insider Monkey, worth about $17.6 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also cut its stock, about $0.9 million worth. These transactions are important to note, as total hedge fund interest fell by 2 funds in the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as HeadHunter Group PLC (NASDAQ:HHR) but similarly valued. These stocks are TiVo Corporation (NASDAQ:TIVO), QEP Resources Inc (NYSE:QEP), Cornerstone Building Brands, Inc. (NYSE:CNR), and Celestica Inc. (NYSE:CLS). This group of stocks' market valuations are closest to HHR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TIVO,26,102564,3 QEP,23,194024,2 CNR,26,114336,8 CLS,13,97259,0 Average,22,127046,3.25 [/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 $127 million. That figure was $63 million in HHR's case. TiVo Corporation (NASDAQ:TIVO) is the most popular stock in this table. On the other hand Celestica Inc. (NYSE:CLS) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks HeadHunter Group PLC (NASDAQ:HHR) is even less popular than CLS. Hedge funds dodged a bullet by taking a bearish stance towards HHR. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but managed to beat the market by 12.9 percentage points. Unfortunately HHR wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); HHR investors were disappointed as the stock returned -22.7% during the same time 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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.