The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Insperity Inc (NYSE:NSP) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Hedge fund interest in Insperity Inc (NYSE:NSP) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that NSP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Moelis & Company (NYSE:MC), Allegiant Travel Company (NASDAQ:ALGT), and Chimera Investment Corporation (NYSE:CIM) to gather more data points.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Larry Robbins of Glenview Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 let’s review the new hedge fund action surrounding Insperity Inc (NYSE:NSP).
Do Hedge Funds Think NSP Is A Good Stock To Buy Now?
At the end of June, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in NSP a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Insperity Inc (NYSE:NSP) was held by Lakewood Capital Management, which reported holding $57.7 million worth of stock at the end of June. It was followed by Glenview Capital with a $47.8 million position. Other investors bullish on the company included Sunriver Management, Value Holdings LP, and GLG Partners. In terms of the portfolio weights assigned to each position Sunriver Management allocated the biggest weight to Insperity Inc (NYSE:NSP), around 5.05% of its 13F portfolio. Value Holdings LP is also relatively very bullish on the stock, dishing out 4.76 percent of its 13F equity portfolio to NSP.
Judging by the fact that Insperity Inc (NYSE:NSP) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few money managers that decided to sell off their positions entirely by the end of the second quarter. Intriguingly, Jeff Osher’s No Street Capital sold off the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $14.2 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund cut about $1.8 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Insperity Inc (NYSE:NSP). We will take a look at Moelis & Company (NYSE:MC), Allegiant Travel Company (NASDAQ:ALGT), Chimera Investment Corporation (NYSE:CIM), Navient Corp (NASDAQ:NAVI), Bandwidth Inc. (NASDAQ:BAND), Mimecast Limited (NASDAQ:MIME), and Apollo Medical Holdings, Inc. (NASDAQ:AMEH). This group of stocks’ market valuations are similar to NSP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MC | 18 | 146026 | -1 |
| ALGT | 29 | 390264 | 7 |
| CIM | 16 | 105209 | 1 |
| NAVI | 17 | 204809 | -6 |
| BAND | 21 | 237541 | -3 |
| MIME | 24 | 384912 | 0 |
| AMEH | 7 | 20969 | 0 |
| Average | 18.9 | 212819 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.9 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $220 million in NSP’s case. Allegiant Travel Company (NASDAQ:ALGT) is the most popular stock in this table. On the other hand Apollo Medical Holdings, Inc. (NASDAQ:AMEH) is the least popular one with only 7 bullish hedge fund positions. Insperity Inc (NYSE:NSP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NSP is 55.2. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on NSP as the stock returned 36.6% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
