We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Quotient Technology Inc (NYSE:QUOT), and what that likely means for the prospects of the company and its stock.
Is Quotient Technology Inc (NYSE:QUOT) a cheap investment today? Prominent investors are unambiguously taking a bullish view. The number of bullish hedge fund investments experienced an increase of 8 in recent months. QUOT was in 15 hedge funds’ portfolios at the end of the third quarter of 2016. There were 7 hedge funds in our database with QUOT positions at the end of the previous quarter. 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 Trade Desk Inc (NASDAQ:TTD), Multi Packaging Solutions Intrntnl Ltd (NYSE:MPSX), and CONMED Corporation (NASDAQ:CNMD) to gather more data points.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
What have hedge funds been doing with Quotient Technology Inc (NYSE:QUOT) ?
Heading into the fourth quarter of 2016, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, up by 114% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards QUOT over the last 5 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Richard Driehaus’ Driehaus Capital has the biggest position in Quotient Technology Inc (NYSE:QUOT) , worth close to $10.5 million. On Driehaus Capital’s heels is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $8.8 million position. Some other peers with similar optimism consist of Millennium Management, one of the 10 largest hedge funds in the world, D. E. Shaw’s D E Shaw and Eric Semler’s TCS Capital Management. We should note that none of these hedge funds are 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.