“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Huron Consulting Group Inc. (NASDAQ:HURN).
Hedge fund interest in Huron Consulting Group Inc. (NASDAQ:HURN) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare HURN to other stocks including Arbor Realty Trust, Inc. (NYSE:ABR), Five Point Holdings, LLC (NYSE:FPH), and Talend S.A. (NASDAQ:TLND) to get a better sense of its popularity. Our calculations also showed that HURN isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the key hedge fund action encompassing Huron Consulting Group Inc. (NASDAQ:HURN).
How are hedge funds trading Huron Consulting Group Inc. (NASDAQ:HURN)?
At Q2’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in HURN a year ago. So, let’s see 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 Huron Consulting Group Inc. (NASDAQ:HURN), which was worth $12.6 million at the end of the second quarter. On the second spot was SG Capital Management which amassed $9.7 million worth of shares. Moreover, SG Capital Management, D E Shaw, and Millennium Management were also bullish on Huron Consulting Group Inc. (NASDAQ:HURN), allocating a large percentage of their portfolios to this stock.
Seeing as Huron Consulting Group Inc. (NASDAQ:HURN) has experienced bearish sentiment from hedge fund managers, logic holds that there exists a select few funds that decided to sell off their full holdings last quarter. Interestingly, Phil Frohlich’s Prescott Group Capital Management dumped the largest stake of the “upper crust” of funds monitored by Insider Monkey, worth close to $0.3 million in stock, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital was right behind this move, as the fund dropped about $0 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to Huron Consulting Group Inc. (NASDAQ:HURN). We will take a look at Arbor Realty Trust, Inc. (NYSE:ABR), Five Point Holdings, LLC (NYSE:FPH), Talend S.A. (NASDAQ:TLND), and Apogee Enterprises, Inc. (NASDAQ:APOG). This group of stocks’ market values are closest to HURN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABR | 14 | 101201 | 5 |
| FPH | 14 | 232584 | -2 |
| TLND | 24 | 367341 | -8 |
| APOG | 12 | 140632 | 1 |
| Average | 16 | 210440 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $210 million. That figure was $31 million in HURN’s case. Talend S.A. (NASDAQ:TLND) is the most popular stock in this table. On the other hand Apogee Enterprises, Inc. (NASDAQ:APOG) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Huron Consulting Group Inc. (NASDAQ:HURN) is even less popular than APOG. Hedge funds clearly dropped the ball on HURN as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on HURN as the stock returned 21.8% during the third quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
