Do Hedge Funds Love Insight Enterprises, Inc. (NSIT)?

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Insight Enterprises, Inc. (NASDAQ:NSIT).

Insight Enterprises, Inc. (NASDAQ:NSIT) was in 17 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 22. NSIT has seen a decrease in activity from the world’s largest hedge funds lately. There were 19 hedge funds in our database with NSIT positions at the end of the fourth quarter. Our calculations also showed that NSIT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Jeffrey Ubben of ValueAct Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Now we’re going to take a look at the recent hedge fund action surrounding Insight Enterprises, Inc. (NASDAQ:NSIT).

Do Hedge Funds Think NSIT Is A Good Stock To Buy Now?

At first quarter’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in NSIT over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Jeffrey Ubben’s ValueAct Capital has the biggest position in Insight Enterprises, Inc. (NASDAQ:NSIT), worth close to $105 million, amounting to 1.2% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which holds a $44.4 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Ken Griffin’s Citadel Investment Group and Renaissance Technologies. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Insight Enterprises, Inc. (NASDAQ:NSIT), around 2.07% of its 13F portfolio. ValueAct Capital is also relatively very bullish on the stock, setting aside 1.23 percent of its 13F equity portfolio to NSIT.

Judging by the fact that Insight Enterprises, Inc. (NASDAQ:NSIT) has faced declining sentiment from the smart money, we can see that there lies a certain “tier” of funds that elected to cut their entire stakes heading into Q2. Interestingly, Valerie Malter’s Matarin Capital said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, worth close to $4.7 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $3.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds heading into Q2.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Insight Enterprises, Inc. (NASDAQ:NSIT) but similarly valued. These stocks are PagerDuty, Inc. (NYSE:PD), Kennametal Inc. (NYSE:KMT), Merit Medical Systems, Inc. (NASDAQ:MMSI), Fabrinet (NYSE:FN), PTC Therapeutics, Inc. (NASDAQ:PTCT), LCI Industries (NYSE:LCII), and ServisFirst Bancshares, Inc. (NYSE:SFBS). This group of stocks’ market valuations resemble NSIT’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.3 hedge funds with bullish positions and the average amount invested in these stocks was $268 million. That figure was $209 million in NSIT’s case. PagerDuty, Inc. (NYSE:PD) is the most popular stock in this table. On the other hand ServisFirst Bancshares, Inc. (NYSE:SFBS) is the least popular one with only 9 bullish hedge fund positions. Insight Enterprises, Inc. (NASDAQ:NSIT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NSIT is 52.8. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately NSIT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); NSIT investors were disappointed as the stock returned 3.3% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.