Is Exponent, Inc. (NASDAQ:EXPO) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Exponent, Inc. (NASDAQ:EXPO) was in 16 hedge funds’ portfolios at the end of the fourth quarter of 2018. EXPO shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. There were 12 hedge funds in our database with EXPO holdings at the end of the previous quarter. Our calculations also showed that expo isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most shareholders, hedge funds are seen as underperforming, outdated investment vehicles of years past. While there are more than 8000 funds in operation today, Our researchers choose to focus on the aristocrats of this group, approximately 750 funds. These hedge fund managers control bulk of the hedge fund industry’s total asset base, and by paying attention to their inimitable stock picks, Insider Monkey has formulated a number of investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outpaced the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
We’re going to take a peek at the fresh hedge fund action regarding Exponent, Inc. (NASDAQ:EXPO).
What does the smart money think about Exponent, Inc. (NASDAQ:EXPO)?
At the end of the fourth quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2018. By comparison, 12 hedge funds held shares or bullish call options in EXPO a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Exponent, Inc. (NASDAQ:EXPO), which was worth $41.9 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $18.5 million worth of shares. Moreover, Sandler Capital Management, Winton Capital Management, and Marshall Wace LLP were also bullish on Exponent, Inc. (NASDAQ:EXPO), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Highland Capital Management, managed by James Dondero, initiated the biggest position in Exponent, Inc. (NASDAQ:EXPO). Highland Capital Management had $2 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $1.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Ian Cumming and Joseph Steinberg’s Leucadia National, Minhua Zhang’s Weld Capital Management, and Brandon Haley’s Holocene Advisors.
Let’s also examine hedge fund activity in other stocks similar to Exponent, Inc. (NASDAQ:EXPO). These stocks are Core Laboratories N.V. (NYSE:CLB), Liberty Latin America Ltd. (NASDAQ:LILAK), Ascendis Pharma A/S (NASDAQ:ASND), and AllianceBernstein Holding LP (NYSE:AB). This group of stocks’ market caps are closest to EXPO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLB | 15 | 217088 | 1 |
| LILAK | 19 | 322082 | 0 |
| ASND | 26 | 1358060 | -1 |
| AB | 7 | 18133 | 1 |
| Average | 16.75 | 478841 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $479 million. That figure was $115 million in EXPO’s case. Ascendis Pharma A/S (NASDAQ:ASND) is the most popular stock in this table. On the other hand AllianceBernstein Holding LP (NYSE:AB) is the least popular one with only 7 bullish hedge fund positions. Exponent, Inc. (NASDAQ:EXPO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately EXPO wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); EXPO investors were disappointed as the stock returned 10.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
