In this article we will check out the progression of hedge fund sentiment towards comScore, Inc. (NASDAQ:SCOR) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
comScore, Inc. (NASDAQ:SCOR) shareholders have witnessed a decrease in enthusiasm from smart money recently. SCOR was in 18 hedge funds’ portfolios at the end of the first quarter of 2020. There were 19 hedge funds in our database with SCOR positions at the end of the previous quarter. Our calculations also showed that SCOR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 S&P 500 ETFs by 58 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 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.
Didric Cederholm of Lion Point Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to view the key hedge fund action regarding comScore, Inc. (NASDAQ:SCOR).
How have hedgies been trading comScore, Inc. (NASDAQ:SCOR)?
Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in SCOR a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Tenzing Global Investors held the most valuable stake in comScore, Inc. (NASDAQ:SCOR), which was worth $12.4 million at the end of the third quarter. On the second spot was Starboard Value LP which amassed $8.4 million worth of shares. Clearline Capital, Lion Point, and Royce & Associates were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Roumell Asset Management allocated the biggest weight to comScore, Inc. (NASDAQ:SCOR), around 7.66% of its 13F portfolio. Tenzing Global Investors is also relatively very bullish on the stock, dishing out 6.85 percent of its 13F equity portfolio to SCOR.
Judging by the fact that comScore, Inc. (NASDAQ:SCOR) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there were a few fund managers who sold off their positions entirely in the first quarter. Intriguingly, Robert G. Moses’s RGM Capital dumped the largest investment of the “upper crust” of funds watched by Insider Monkey, valued at close to $10 million in stock, and Joseph Samuels’s Islet Management was right behind this move, as the fund dumped about $3.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds in the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as comScore, Inc. (NASDAQ:SCOR) but similarly valued. We will take a look at Transcat, Inc. (NASDAQ:TRNS), NACCO Industries, Inc. (NYSE:NC), Hurco Companies, Inc. (NASDAQ:HURC), and Genesco Inc. (NYSE:GCO). This group of stocks’ market caps are similar to SCOR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRNS | 7 | 36708 | -1 |
| NC | 5 | 10318 | -4 |
| HURC | 5 | 31460 | -1 |
| GCO | 11 | 9290 | -10 |
| Average | 7 | 21944 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $60 million in SCOR’s case. Genesco Inc. (NYSE:GCO) is the most popular stock in this table. On the other hand NACCO Industries, Inc. (NYSE:NC) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks comScore, Inc. (NASDAQ:SCOR) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. Unfortunately SCOR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SCOR were disappointed as the stock returned 18.1% during the second quarter (through June 22nd) 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 in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
