Should You Avoid Insperity Inc (NSP)?

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 Insperity Inc (NYSE:NSP) .

Insperity Inc (NYSE:NSP) was in 18 hedge funds’ portfolios at the end of the third quarter of 2016. NSP shareholders have witnessed a decrease in support from the world’s most successful money managers in recent months. There were 20 hedge funds in our database with NSP positions at the end of the previous quarter. At the end of this article we will also compare NSP to other stocks including Avon Products, Inc. (NYSE:AVP), South State Corporation (NASDAQ:SSB), and Cooper Tire & Rubber Company (NYSE:CTB) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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How are hedge funds trading Insperity Inc (NYSE:NSP)?

At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a fall of 10% from the second quarter of 2016. By comparison, 25 hedge funds held shares or bullish call options in NSP heading into 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.

According to Insider Monkey’s hedge fund database, Jeffrey Smith’s Starboard Value LP holds the most valuable position in Insperity Inc (NYSE:NSP). Starboard Value LP has a $108.7 million position in the stock, comprising 3% of its 13F portfolio. The second largest stake is held by Jim Simons’ Renaissance Technologies, with a $16.5 million position. Some other hedge funds and institutional investors that hold long positions encompass Cliff Asness’ AQR Capital Management, D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that Starboard Value LP is 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.

Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that sold off their entire stakes in the stock during the third quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the biggest investment of all the hedgies studied by Insider Monkey, worth an estimated $12.3 million in stock. Michael R. Weisberg’s fund, Crestwood Capital Management, also dropped its stock, about $10.4 million worth.

Let’s go over hedge fund activity in other stocks similar to Insperity Inc (NYSE:NSP). These stocks are Avon Products, Inc. (NYSE:AVP), South State Corporation (NASDAQ:SSB), Cooper Tire & Rubber Company (NYSE:CTB), and LendingClub Corp (NYSE:LC). This group of stocks’ market values are similar to NSP’s market value.

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 $200 million. That figure was $196 million in NSP’s case. Avon Products, Inc. (NYSE:AVP) is the most popular stock in this table. On the other hand South State Corporation (NASDAQ:SSB) is the least popular one with only 11 bullish hedge fund positions. Insperity Inc (NYSE:NSP) 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 AVP might be a better candidate to consider taking a long position in.

Disclosure: None