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 QuinStreet Inc (NASDAQ:QNST) makes for a good investment right now.
QuinStreet Inc (NASDAQ:QNST) was in 21 hedge funds' portfolios at the end of June. QNST has experienced a decrease in enthusiasm from smart money in recent months. There were 25 hedge funds in our database with QNST holdings at the end of the previous quarter. Our calculations also showed that QNST 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 eyes of most shareholders, hedge funds are assumed to be slow, old financial vehicles of years past. While there are over 8000 funds in operation at present, Our researchers hone in on the masters of this club, about 750 funds. Most estimates calculate that this group of people shepherd the majority of the hedge fund industry's total asset base, and by tracking their unrivaled equity investments, Insider Monkey has revealed a number of investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Now we're going to analyze the fresh hedge fund action surrounding QuinStreet Inc (NASDAQ:QNST).
What does smart money think about QuinStreet Inc (NASDAQ:QNST)?
At Q2's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards QNST over the last 16 quarters. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Park West Asset Management, managed by Peter S. Park, holds the largest position in QuinStreet Inc (NASDAQ:QNST). Park West Asset Management has a $63.4 million position in the stock, comprising 2.6% of its 13F portfolio. The second largest stake is held by Private Capital Management, managed by Gregg J. Powers, which holds a $54.9 million position; the fund has 8.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Paul Reeder and Edward Shapiro's PAR Capital Management, Richard Driehaus's Driehaus Capital and George McCabe's Portolan Capital Management.
Due to the fact that QuinStreet Inc (NASDAQ:QNST) has experienced falling interest from hedge fund managers, we can see that there is a sect of money managers that slashed their full holdings heading into Q3. At the top of the heap, Renaissance Technologies sold off the biggest position of the 750 funds watched by Insider Monkey, totaling an estimated $5.6 million in stock. Genevieve Kahr's fund, Ailanthus Capital Management, also cut its stock, about $2.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds heading into Q3.
Let's also examine hedge fund activity in other stocks similar to QuinStreet Inc (NASDAQ:QNST). These stocks are Intra-Cellular Therapies Inc (NASDAQ:ITCI), Kura Oncology, Inc. (NASDAQ:KURA), Eagle Pharmaceuticals Inc (NASDAQ:EGRX), and Northern Oil & Gas, Inc. (NYSEAMEX:NOG). All of these stocks' market caps resemble QNST's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ITCI,11,39450,-1 KURA,22,289681,5 EGRX,20,157855,-3 NOG,19,87321,-1 Average,18,143577,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $219 million in QNST's case. Kura Oncology, Inc. (NASDAQ:KURA) is the most popular stock in this table. On the other hand Intra-Cellular Therapies Inc (NASDAQ:ITCI) is the least popular one with only 11 bullish hedge fund positions. QuinStreet Inc (NASDAQ:QNST) 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 QNST wasn't nearly as popular as these 20 stocks and hedge funds that were betting on QNST were disappointed as the stock returned -20.6% 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.