Huron Consulting Group (HURN): Are Hedge Funds Right About This Stock?

The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Huron Consulting Group (NASDAQ:HURN) from the perspective of those successful funds.

Huron Consulting Group (NASDAQ:HURN) was included in the 13F portfolios of 12 funds from our database at the end of the third quarter of 2016. HURN has experienced an increase in support from the world’s most successful money managers as there had been 11 hedge funds with HURN holdings at the end of the previous quarter. At the end of this article we will also compare HURN to other stocks including MaxLinear, Inc. (NYSE:MXL), FibroGen Inc (NASDAQ:FGEN), and Advantage Oil & Gas Ltd (USA) (NYSE:AAV) to get a better sense of its popularity.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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With all of this in mind, we’re going to check out the recent action encompassing Huron Consulting Group (NASDAQ:HURN).

What have hedge funds been doing with Huron Consulting Group (NASDAQ:HURN)?

Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. By comparison, nine hedge funds held shares or bullish call options in HURN heading into this year. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Brian Taylor’s Pine River Capital Management has the largest position in Huron Consulting Group (NASDAQ:HURN), worth close to $4.6 million, amounting to 0.1% of its total 13F portfolio. The second largest stake is held by Gotham Asset Management, led by Joel Greenblatt, which holds a $3.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish include D. E. Shaw’s D E Shaw and Phil Frohlich’s Prescott Group Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

With a general bullishness amongst the heavyweights, key money managers have jumped into Huron Consulting Group (NASDAQ:HURN) headfirst. Millennium Management, one of the 10 largest hedge funds in the world,established the largest position in Huron Consulting Group (NASDAQ:HURN). Millennium Management had $1.2 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $0.6 million position during the quarter. The other funds with brand new HURN positions are Matthew Tewksbury’s Stevens Capital Management and Dmitry Balyasny’s Balyasny Asset Management.

Let’s go over hedge fund activity in other stocks similar to Huron Consulting Group (NASDAQ:HURN). These stocks are MaxLinear, Inc. (NYSE:MXL), FibroGen Inc (NASDAQ:FGEN), Advantage Oil & Gas Ltd (USA) (NYSE:AAV), and Infinera Corp. (NASDAQ:INFN). This group of stocks’ market caps are similar to HURN’s market cap.

As you can see these stocks had an average of 16 funds with bullish positions and the average amount invested in these stocks was $88 million, versus $17 million in HURN’s case. MaxLinear, Inc. (NYSE:MXL) is the most popular stock in this table. On the other hand Advantage Oil & Gas Ltd (USA) (NYSE:AAV) is the least popular one with only nine funds holding shares. Huron Consulting Group (NASDAQ:HURN) 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. In this regard, MaxLinear might be a better candidate to consider taking a long position in.

Disclosure: none