We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Robert Half International Inc. (NYSE:RHI) and determine whether hedge funds skillfully traded this stock.
Is Robert Half International Inc. (NYSE:RHI) ready to rally soon? Investors who are in the know were taking a bullish view. The number of bullish hedge fund bets rose by 2 lately. Robert Half International Inc. (NYSE:RHI) was in 28 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that RHI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 26 hedge funds in our database with RHI holdings at the end of March.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Clint Carlson of Carlson Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a peek at the recent hedge fund action surrounding Robert Half International Inc. (NYSE:RHI).
How have hedgies been trading Robert Half International Inc. (NYSE:RHI)?
At Q2’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RHI over the last 20 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Cliff Asness’s AQR Capital Management has the most valuable position in Robert Half International Inc. (NYSE:RHI), worth close to $195.5 million, accounting for 0.3% of its total 13F portfolio. The second largest stake is held by Carlson Capital, led by Clint Carlson, holding a $27.3 million position; 0.8% of its 13F portfolio is allocated to the stock. Some other peers that are bullish comprise Renaissance Technologies, Phill Gross and Robert Atchinson’s Adage Capital Management and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management. In terms of the portfolio weights assigned to each position Carlson Capital allocated the biggest weight to Robert Half International Inc. (NYSE:RHI), around 0.75% of its 13F portfolio. Cinctive Capital Management is also relatively very bullish on the stock, designating 0.61 percent of its 13F equity portfolio to RHI.
As industrywide interest jumped, some big names have jumped into Robert Half International Inc. (NYSE:RHI) headfirst. Cinctive Capital Management, managed by Richard SchimeláandáLawrence Sapanski, initiated the largest position in Robert Half International Inc. (NYSE:RHI). Cinctive Capital Management had $5.3 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $4 million investment in the stock during the quarter. The other funds with new positions in the stock are John D. Gillespie’s Prospector Partners, Steve Cohen’s Point72 Asset Management, and William B. Gray’s Orbis Investment Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Robert Half International Inc. (NYSE:RHI) but similarly valued. These stocks are Reliance Steel & Aluminum Co. (NYSE:RS), Morningstar, Inc. (NASDAQ:MORN), Aegon N.V. (NYSE:AEG), CF Industries Holdings, Inc. (NYSE:CF), AECOM (NYSE:ACM), Owens Corning (NYSE:OC), and Vroom, Inc. (NASDAQ:VRM). All of these stocks’ market caps are closest to RHI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RS | 27 | 221183 | 4 |
| MORN | 20 | 292962 | 7 |
| AEG | 4 | 16423 | 0 |
| CF | 37 | 547941 | 3 |
| ACM | 38 | 664429 | -1 |
| OC | 37 | 576140 | 7 |
| VRM | 28 | 310338 | 28 |
| Average | 27.3 | 375631 | 6.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $376 million. That figure was $301 million in RHI’s case. AECOM (NYSE:ACM) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 4 bullish hedge fund positions. Robert Half International Inc. (NYSE:RHI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RHI is 72.3. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately RHI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on RHI were disappointed as the stock returned 0% during the same time period 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
