Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Heidrick & Struggles International, Inc. (NASDAQ:HSII).
Heidrick & Struggles International, Inc. (NASDAQ:HSII) was in 19 hedge funds’ portfolios at the end of September. HSII investors should pay attention to an increase in enthusiasm from smart money recently. There were 13 hedge funds in our database with HSII positions at the end of the previous quarter. Our calculations also showed that HSII 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’ 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 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 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.
We’re going to view the key hedge fund action encompassing Heidrick & Struggles International, Inc. (NASDAQ:HSII).
What does the smart money think about Heidrick & Struggles International, Inc. (NASDAQ:HSII)?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 46% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards HSII over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Heidrick & Struggles International, Inc. (NASDAQ:HSII), which was worth $46.7 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $17.3 million worth of shares. Moreover, GLG Partners, Millennium Management, and D E Shaw were also bullish on Heidrick & Struggles International, Inc. (NASDAQ:HSII), allocating a large percentage of their portfolios to this stock.
Consequently, key hedge funds were breaking ground themselves. HBK Investments, managed by David Costen Haley, initiated the biggest position in Heidrick & Struggles International, Inc. (NASDAQ:HSII). HBK Investments had $1.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $1.4 million position during the quarter. The other funds with brand new HSII positions are Joel Greenblatt’s Gotham Asset Management, Peter Muller’s PDT Partners, and Jeffrey Talpins’s Element Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Heidrick & Struggles International, Inc. (NASDAQ:HSII). We will take a look at Secoo Holding Limited (NASDAQ:SECO), Winmark Corporation (NASDAQ:WINA), SMART Global Holdings, Inc. (NASDAQ:SGH), and SunOpta, Inc. (NASDAQ:STKL). This group of stocks’ market values match HSII’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SECO | 5 | 12761 | 1 |
| WINA | 7 | 89605 | -1 |
| SGH | 12 | 293771 | -5 |
| STKL | 14 | 193827 | -3 |
| Average | 9.5 | 147491 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $147 million. That figure was $112 million in HSII’s case. SunOpta, Inc. (NASDAQ:STKL) is the most popular stock in this table. On the other hand Secoo Holding Limited (NASDAQ:SECO) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Heidrick & Struggles International, Inc. (NASDAQ:HSII) 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.
