We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of StarTek, Inc. (NYSE:SRT) based on that data.
Hedge fund interest in StarTek, Inc. (NYSE:SRT) shares was flat at the end of last quarter. This is usually a negative indicator. 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 SWK Holdings Corporation (NASDAQ:SWKH), IDT Corporation (NYSE:IDT), and Rocky Brands, Inc. (NASDAQ:RCKY) to gather more data points. Our calculations also showed that SRT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a gander at the latest hedge fund action encompassing StarTek, Inc. (NYSE:SRT).
What does smart money think about StarTek, Inc. (NYSE:SRT)?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards SRT 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.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the largest position in StarTek, Inc. (NYSE:SRT), worth close to $2.8 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding a $0.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers with similar optimism contain David Harding’s Winton Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and . In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to StarTek, Inc. (NYSE:SRT), around 0.0031% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0028 percent of its 13F equity portfolio to SRT.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now take a look at hedge fund activity in other stocks similar to StarTek, Inc. (NYSE:SRT). These stocks are SWK Holdings Corporation (NASDAQ:SWKH), IDT Corporation (NYSE:IDT), Rocky Brands, Inc. (NASDAQ:RCKY), and Collectors Universe, Inc. (NASDAQ:CLCT). All of these stocks’ market caps are closest to SRT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SWKH | 4 | 116218 | 4 |
| IDT | 10 | 18102 | 1 |
| RCKY | 9 | 12139 | -3 |
| CLCT | 8 | 26945 | -2 |
| Average | 7.75 | 43351 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $3 million in SRT’s case. IDT Corporation (NYSE:IDT) is the most popular stock in this table. On the other hand SWK Holdings Corporation (NASDAQ:SWKH) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks StarTek, Inc. (NYSE:SRT) is even less popular than SWKH. Hedge funds dodged a bullet by taking a bearish stance towards SRT. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately SRT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); SRT investors were disappointed as the stock returned 12% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
