The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards InnerWorkings, Inc. (NASDAQ:INWK).
InnerWorkings, Inc. (NASDAQ:INWK) registered a slight increase in activity from the world’s largest hedge funds in recent months. There were 12 funds in our database with INWK positions at the end of September. 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 Chromcraft Revington, Inc. (NYSEAMEX:CRC), Cobalt International Energy, Inc. (NYSE:CIE), and CalAmp Corp. (NASDAQ:CAMP) to gather more data points.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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Now, let’s analyze the latest action encompassing InnerWorkings, Inc. (NASDAQ:INWK).
Hedge fund activity in InnerWorkings, Inc. (NASDAQ:INWK)
Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. On the other hand, there were a total of seven hedge funds with a bullish position in INWK at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, David Park’s Headlands Capital has the largest position in InnerWorkings, Inc. (NASDAQ:INWK), worth close to $24.8 million, comprising 19.7% of its total 13F portfolio. The second largest stake is held by Rutabaga Capital Management, led by Peter Schliemann, which holds a $15.8 million position; the fund has 3.2% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions encompass Jim Simons’ Renaissance Technologies, D E Shaw, one of the biggest hedge funds in the world, and John Overdeck and David Siegel’s Two Sigma Advisors. 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.
As industrywide interest jumped, key hedge funds have jumped into InnerWorkings, Inc. (NASDAQ:INWK) headfirst. Ellington, led by Mike Vranos, initiated the largest position in InnerWorkings, Inc. (NASDAQ:INWK). Ellington had $1.2 million invested in the company at the end of the quarter. Amy Minella’s Cardinal Capital also initiated a $0.7 million position during the quarter. The only other fund with a brand new INWK position is Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as InnerWorkings, Inc. (NASDAQ:INWK) but similarly valued. We will take a look at Chromcraft Revington, Inc. (NYSEAMEX:CRC), Cobalt International Energy, Inc. (NYSE:CIE), CalAmp Corp. (NASDAQ:CAMP), and Stoneridge, Inc. (NYSE:SRI). This group of stocks’ market values are closest to INWK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRC | 28 | 175628 | -7 |
| CIE | 18 | 280699 | 1 |
| CAMP | 11 | 26780 | -6 |
| SRI | 24 | 100450 | 3 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $146 million. That figure was $54 million in INWK’s case. Chromcraft Revington, Inc. (NYSEAMEX:CRC) is the most popular stock in this table. On the other hand CalAmp Corp. (NASDAQ:CAMP) is the least popular one with only 11 bullish hedge fund positions. InnerWorkings, Inc. (NASDAQ:INWK) 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 CRC might be a better candidate to consider taking a long position in.
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