Is BSQUARE Corporation (BSQR) A Good Stock To Buy?

In this article we are going to use hedge fund sentiment as a tool and determine whether BSQUARE Corporation (NASDAQ:BSQR) 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 BSQUARE Corporation (NASDAQ:BSQR) a good buy? The best stock pickers were in an optimistic mood. The number of bullish hedge fund positions increased by 1 lately. BSQUARE Corporation (NASDAQ:BSQR) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 7. Our calculations also showed that BSQR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 2 hedge funds in our database with BSQR positions at the end of the fourth quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Peter Rathjens of Arrowstreet Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 we’re going to take a gander at the new hedge fund action encompassing BSQUARE Corporation (NASDAQ:BSQR).

Do Hedge Funds Think BSQR Is A Good Stock To Buy Now?

At first quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. On the other hand, there were a total of 1 hedge funds with a bullish position in BSQR a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

The largest stake in BSQUARE Corporation (NASDAQ:BSQR) was held by Renaissance Technologies, which reported holding $3.5 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $0.4 million position. The only other hedge fund that is bullish on the company was Arrowstreet Capital.

Consequently, key hedge funds have jumped into BSQUARE Corporation (NASDAQ:BSQR) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most outsized position in BSQUARE Corporation (NASDAQ:BSQR). Arrowstreet Capital had $0 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as BSQUARE Corporation (NASDAQ:BSQR) but similarly valued. These stocks are RiceBran Technologies (NASDAQ:RIBT), Hudson Global Inc (NASDAQ:HSON), Willamette Valley Vineyards, Inc. (NASDAQ:WVVI), Hoth Therapeutics, Inc. (NASDAQ:HOTH), Acer Therapeutics Inc. (NASDAQ:ACER), A. H. Belo Corporation (NYSE:AHC), and Global Self Storage, Inc. (NASDAQ:SELF). All of these stocks’ market caps resemble BSQR’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $4 million in BSQR’s case. A. H. Belo Corporation (NYSE:AHC) is the most popular stock in this table. On the other hand Hudson Global Inc (NASDAQ:HSON) is the least popular one with only 1 bullish hedge fund positions. BSQUARE Corporation (NASDAQ:BSQR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BSQR is 38.9. 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. 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 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately BSQR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BSQR investors were disappointed as the stock returned -24% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

Disclosure: None. This article was originally published at Insider Monkey.