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Did Hedge Funds Make The Right Call On The Hackett Group, Inc. (HCKT)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtThe Hackett Group, Inc. (NASDAQ:HCKT) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

The Hackett Group, Inc. (NASDAQ:HCKT) investors should be aware of an increase in activity from the world’s largest hedge funds recently. HCKT was in 18 hedge funds’ portfolios at the end of March. There were 16 hedge funds in our database with HCKT holdings at the end of the previous quarter. Our calculations also showed that HCKT 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.

To the average investor there are a large number of signals market participants can use to value their holdings. A duo of the best signals are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best investment managers can trounce their index-focused peers by a significant margin (see the details here).

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to take a look at the key hedge fund action encompassing The Hackett Group, Inc. (NASDAQ:HCKT).

What does smart money think about The Hackett Group, Inc. (NASDAQ:HCKT)?

At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in HCKT a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

More specifically, Trigran Investments was the largest shareholder of The Hackett Group, Inc. (NASDAQ:HCKT), with a stake worth $28.9 million reported as of the end of September. Trailing Trigran Investments was Renaissance Technologies, which amassed a stake valued at $17.6 million. Hosking Partners, AQR Capital Management, and Royce & Associates were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Trigran Investments allocated the biggest weight to The Hackett Group, Inc. (NASDAQ:HCKT), around 6.35% of its 13F portfolio. AltraVue Capital is also relatively very bullish on the stock, designating 0.83 percent of its 13F equity portfolio to HCKT.

As one would reasonably expect, key hedge funds have jumped into The Hackett Group, Inc. (NASDAQ:HCKT) headfirst. Engineers Gate Manager, managed by Greg Eisner, initiated the most outsized position in The Hackett Group, Inc. (NASDAQ:HCKT). Engineers Gate Manager had $0.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new HCKT position is Mike Vranos’s Ellington.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as The Hackett Group, Inc. (NASDAQ:HCKT) but similarly valued. We will take a look at AnaptysBio, Inc. (NASDAQ:ANAB), The Marcus Corporation (NYSE:MCS), Par Pacific Holdings, Inc. (NYSE:PARR), and Independence Holding Company (NYSE:IHC). This group of stocks’ market caps resemble HCKT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ANAB 25 231710 -2
MCS 14 19830 -1
PARR 18 48678 0
IHC 2 13618 -3
Average 14.75 78459 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $88 million in HCKT’s case. AnaptysBio, Inc. (NASDAQ:ANAB) is the most popular stock in this table. On the other hand Independence Holding Company (NYSE:IHC) is the least popular one with only 2 bullish hedge fund positions. The Hackett Group, Inc. (NASDAQ:HCKT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th but beat the market by 17.1 percentage points. Unfortunately HCKT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HCKT were disappointed as the stock returned 10% during the same time period 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 many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.