Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 8.7% through October 26th. Forty percent of the S&P 500 constituents were down more than 10%. The average return of a randomly picked stock in the index is -9.5%. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 25 most popular S&P 500 stocks among hedge funds had an average loss of 8.8%. In this article, we will take a look at what hedge funds think about QuinStreet Inc (NASDAQ:QNST).
Is QuinStreet Inc (NASDAQ:QNST) a buy right now? Hedge funds are buying. The number of long hedge fund positions rose by 7 lately. Our calculations also showed that QNST isn’t among the 30 most popular stocks among hedge funds.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the fresh hedge fund action surrounding QuinStreet Inc (NASDAQ:QNST).
How have hedgies been trading QuinStreet Inc (NASDAQ:QNST)?
Heading into the fourth quarter of 2018, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in QNST over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Private Capital Management held the most valuable stake in QuinStreet Inc (NASDAQ:QNST), which was worth $62.7 million at the end of the third quarter. On the second spot was Park West Asset Management which amassed $24.9 million worth of shares. Moreover, Driehaus Capital, Renaissance Technologies, and Royce & Associates were also bullish on QuinStreet Inc (NASDAQ:QNST), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key money managers have jumped into QuinStreet Inc (NASDAQ:QNST) headfirst. Osterweis Capital Management, managed by John Osterweis, assembled the most outsized position in QuinStreet Inc (NASDAQ:QNST). Osterweis Capital Management had $4.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $3.8 million investment in the stock during the quarter. The other funds with brand new QNST positions are Ken Griffin’s Citadel Investment Group, George McCabe’s Portolan Capital Management, and Joel Greenblatt’s Gotham Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as QuinStreet Inc (NASDAQ:QNST) but similarly valued. These stocks are U.S. Xpress Enterprises, Inc. (NYSE:USX), Blue Bird Corporation (NASDAQ:BLBD), Pzena Investment Management Inc (NYSE:PZN), and Timkensteel Corp (NYSE:TMST). This group of stocks’ market values are similar to QNST’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| USX | 13 | 101046 | -5 |
| BLBD | 18 | 181715 | -2 |
| PZN | 4 | 12890 | -1 |
| TMST | 10 | 115386 | -3 |
| Average | 11.25 | 102759 | -2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $187 million in QNST’s case. Blue Bird Corporation (NASDAQ:BLBD) is the most popular stock in this table. On the other hand Pzena Investment Management Inc (NYSE:PZN) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks QuinStreet Inc (NASDAQ:QNST) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
