Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Heidrick & Struggles International, Inc. (NASDAQ:HSII) in this article.
Is Heidrick & Struggles International, Inc. (NASDAQ:HSII) the right investment to pursue these days? Hedge funds were getting more optimistic. The number of bullish hedge fund positions rose by 5 in recent months. Heidrick & Struggles International, Inc. (NASDAQ:HSII) was in 17 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 22. Our calculations also showed that HSII isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 peek at the recent hedge fund action encompassing Heidrick & Struggles International, Inc. (NASDAQ:HSII).
Do Hedge Funds Think HSII Is A Good Stock To Buy Now?
At the end of March, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 42% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in HSII a year ago. 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, holds the most valuable position in Heidrick & Struggles International, Inc. (NASDAQ:HSII). Renaissance Technologies has a $49.6 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which holds a $44.1 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass D. E. Shaw's D E Shaw, Ken Griffin's Citadel Investment Group and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Nierenberg Investment Management allocated the biggest weight to Heidrick & Struggles International, Inc. (NASDAQ:HSII), around 0.45% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.3 percent of its 13F equity portfolio to HSII.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, created the most valuable position in Heidrick & Struggles International, Inc. (NASDAQ:HSII). Millennium Management had $1 million invested in the company at the end of the quarter. David Nierenberg's Nierenberg Investment Management also initiated a $0.6 million position during the quarter. The other funds with brand new HSII positions are Peter Algert's Algert Global, Michael Gelband's ExodusPoint Capital, and Thomas Bailard's Bailard Inc.
Let's also examine hedge fund activity in other stocks similar to Heidrick & Struggles International, Inc. (NASDAQ:HSII). We will take a look at Bright Scholar Education Holdings Limited (NYSE:BEDU), Winmark Corporation (NASDAQ:WINA), Antares Pharma Inc (NASDAQ:ATRS), Brookfield Property REIT Inc. (NASDAQ:BPYU), Intersect ENT Inc (NASDAQ:XENT), Calliditas Therapeutics AB (publ) (NASDAQ:CALT), and Nabors Industries Ltd. (NYSE:NBR). This group of stocks' market values resemble HSII's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BEDU,7,65735,1 WINA,10,86703,-1 ATRS,17,57189,-1 BPYU,7,15181,0 XENT,14,122702,-2 CALT,8,61776,0 NBR,15,38032,0 Average,11.1,63903,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $111 million in HSII's case. Antares Pharma Inc (NASDAQ:ATRS) is the most popular stock in this table. On the other hand Bright Scholar Education Holdings Limited (NYSE:BEDU) is the least popular one with only 7 bullish hedge fund positions. Heidrick & Struggles International, Inc. (NASDAQ:HSII) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HSII is 83.2. 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. 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 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Hedge funds were also right about betting on HSII, though not to the same extent, as the stock returned 14.6% since Q1 (through July 23rd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.