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While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Volt Information Sciences, Inc. (NYSE:VOLT).
Volt Information Sciences, Inc. (NYSE:VOLT) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that VOLT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare VOLT to other stocks including Willamette Valley Vineyards, Inc. (NASDAQ:WVVI), NovaBay Pharmaceuticals, Inc. (NYSE:NBY), and AgeX Therapeutics, Inc. (NYSE:AGE) to get a better sense of its popularity.
Video: 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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Jim Simons founder of Renaissance Technologies
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we're going to take a look at the recent hedge fund action encompassing Volt Information Sciences, Inc. (NYSE:VOLT).
How are hedge funds trading Volt Information Sciences, Inc. (NYSE:VOLT)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VOLT over the last 21 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Archon Capital Management, managed by Constantinos J. Christofilis, holds the number one position in Volt Information Sciences, Inc. (NYSE:VOLT). Archon Capital Management has a $1 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager of Renaissance Technologies, with a $0.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that are bullish comprise David P. Cohen's Minerva Advisors, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to Volt Information Sciences, Inc. (NYSE:VOLT), around 0.21% of its 13F portfolio. Archon Capital Management is also relatively very bullish on the stock, dishing out 0.2 percent of its 13F equity portfolio to VOLT.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: PEAK6 Capital Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Volt Information Sciences, Inc. (NYSE:VOLT) but similarly valued. These stocks are Willamette Valley Vineyards, Inc. (NASDAQ:WVVI), NovaBay Pharmaceuticals, Inc. (NYSE:NBY), AgeX Therapeutics, Inc. (NYSE:AGE), FreightCar America, Inc. (NASDAQ:RAIL), Ossen Innovation Co Ltd (NASDAQ:OSN), Seanergy Maritime Holdings Corp. (NASDAQ:SHIP), and Adial Pharmaceuticals, Inc (NASDAQ:ADIL). This group of stocks' market caps are closest to VOLT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WVVI,1,689,0 NBY,2,464,0 AGE,3,2640,-3 RAIL,6,2890,-1 OSN,1,447,0 SHIP,4,2479,2 ADIL,1,207,0 Average,2.6,1402,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.6 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $2 million in VOLT's case. FreightCar America, Inc. (NASDAQ:RAIL) is the most popular stock in this table. On the other hand Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) is the least popular one with only 1 bullish hedge fund positions. Volt Information Sciences, Inc. (NYSE:VOLT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VOLT is 52.1. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on VOLT as the stock returned 53.9% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.