Hedge Funds Are Selling Robert Half International Inc. (RHI)

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Robert Half International Inc. (NYSE:RHI).

Robert Half International Inc. (NYSE:RHI) has seen a decrease in enthusiasm from smart money of late. RHI was in 21 hedge funds’ portfolios at the end of the third quarter of 2016. There were 26 hedge funds in our database with RHI positions at the end of the previous quarter. At the end of this article we will also compare RHI to other stocks including Edgewell Personal Care Company (NYSE:EPC), Godaddy Inc (NYSE:GDDY), and Sonoco Products Company (NYSE:SON) 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.

How are hedge funds trading Robert Half International Inc. (NYSE:RHI)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a fall of 19% from the second quarter of 2016. There has been a 25% reduction in hedge funds long the stock over the last year. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the most valuable position in Robert Half International Inc. (NYSE:RHI). AQR Capital Management has a $105.1 million position in the stock. Coming in second is Royce & Associates, led by Chuck Royce, holding a $55.2 million position. Some other hedge funds and institutional investors that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, Joel Greenblatt’s Gotham Asset Management and John A. Levin’s Levin Capital Strategies.

Judging by the fact that Robert Half International Inc. (NYSE:RHI) has experienced a decline in interest from the smart money, we can see that there is a sect of money managers who sold off their full holdings last quarter. Interestingly, George Hall’s Clinton Group dumped the biggest position of all the hedgies watched by Insider Monkey, valued at close to $5 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dumped about $3.9 million worth of shares. These transactions are intriguing to say the least, as total hedge fund interest fell by 5 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Robert Half International Inc. (NYSE:RHI). These stocks are Edgewell Personal Care Company (NYSE:EPC), Godaddy Inc (NYSE:GDDY), Sonoco Products Company (NYSE:SON), and Vail Resorts, Inc. (NYSE:MTN). This group of stocks’ market valuations resemble RHI’s market valuation.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $594 million. That figure was $253 million in RHI’s case. Vail Resorts, Inc. (NYSE:MTN) is the most popular stock in this table. On the other hand Sonoco Products Company (NYSE:SON) is the least popular one with only 17 bullish hedge fund positions. Robert Half International Inc. (NYSE:RHI) 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 MTN might be a better candidate to consider a long position in.

Disclosure: None