We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Huron Consulting Group (NASDAQ:HURN) is a good investment right now. We like to analyze hedge fund sentiment before conducting 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.
Is Huron Consulting Group (NASDAQ:HURN) a good investment now? Investors who are in the know are becoming more confident. The number of bullish hedge fund positions moved up by 3 recently. Our calculations also showed that HURN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
If you’d ask most shareholders, hedge funds are assumed to be worthless, outdated financial tools of yesteryear. While there are over 8000 funds in operation at the moment, Our researchers look at the leaders of this group, around 850 funds. It is estimated that this group of investors manage the lion’s share of the hedge fund industry’s total asset base, and by monitoring their inimitable stock picks, Insider Monkey has brought to light a few investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Matthew Hulsizer of PEAK6 Capital
We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a glance at the new hedge fund action encompassing Huron Consulting Group (NASDAQ:HURN).
How have hedgies been trading Huron Consulting Group (NASDAQ:HURN)?
At the end of the fourth quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards HURN over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Huron Consulting Group (NASDAQ:HURN), with a stake worth $22.8 million reported as of the end of September. Trailing Renaissance Technologies was Intrinsic Edge Capital, which amassed a stake valued at $4.6 million. Millennium Management, Two Sigma Advisors, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Intrinsic Edge Capital allocated the biggest weight to Huron Consulting Group (NASDAQ:HURN), around 0.58% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, setting aside 0.42 percent of its 13F equity portfolio to HURN.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, established the most outsized position in Huron Consulting Group (NASDAQ:HURN). Citadel Investment Group had $1.9 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $0.3 million investment in the stock during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Huron Consulting Group (NASDAQ:HURN) but similarly valued. These stocks are BioTelemetry, Inc. (NASDAQ:BEAT), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), STAAR Surgical Company (NASDAQ:STAA), and SFL Corporation Ltd. (NYSE:SFL). All of these stocks’ market caps are closest to HURN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BEAT | 15 | 49876 | -3 |
| SBCF | 8 | 50927 | 2 |
| STAA | 23 | 612599 | 8 |
| SFL | 14 | 89602 | 0 |
| Average | 15 | 200751 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $201 million. That figure was $48 million in HURN’s case. STAAR Surgical Company (NASDAQ:STAA) is the most popular stock in this table. On the other hand Seacoast Banking Corporation of Florida (NASDAQ:SBCF) is the least popular one with only 8 bullish hedge fund positions. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately HURN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HURN investors were disappointed as the stock returned -33.3% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
