We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Insight Enterprises, Inc. (NASDAQ:NSIT) and determine whether hedge funds skillfully traded this stock.
Is Insight Enterprises, Inc. (NASDAQ:NSIT) an attractive investment right now? Investors who are in the know were getting more bullish. The number of bullish hedge fund bets inched up by 7 recently. Insight Enterprises, Inc. (NASDAQ:NSIT) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistics is 22. Our calculations also showed that NSIT isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox.Keeping this in mind let’s go over the fresh hedge fund action surrounding Insight Enterprises, Inc. (NASDAQ:NSIT).
Hedge fund activity in Insight Enterprises, Inc. (NASDAQ:NSIT)
At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 54% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NSIT over the last 20 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in Insight Enterprises, Inc. (NASDAQ:NSIT), which was worth $22.3 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $14.3 million worth of shares. Citadel Investment Group, Pzena Investment Management, and AQR Capital Management 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 Zebra Capital Management allocated the biggest weight to Insight Enterprises, Inc. (NASDAQ:NSIT), around 1.09% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.25 percent of its 13F equity portfolio to NSIT.
Now, specific money managers have been driving this bullishness. Deepcurrents Investment Group, managed by Steve Zheng, initiated the largest position in Insight Enterprises, Inc. (NASDAQ:NSIT). Deepcurrents Investment Group had $4 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $1 million position during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Michael Gelband’s ExodusPoint Capital, and Greg Eisner’s Engineers Gate Manager.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Insight Enterprises, Inc. (NASDAQ:NSIT) but similarly valued. These stocks are Hecla Mining Company (NYSE:HL), Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB), Four Corners Property Trust, Inc. (NYSE:FCPT), Paramount Group Inc (NYSE:PGRE), Silicon Motion Technology Corp. (NASDAQ:SIMO), WW International, Inc. (NASDAQ:WW), and CareDx, Inc. (NASDAQ:CDNA). This group of stocks’ market values are similar to NSIT’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 18.9 hedge funds with bullish positions and the average amount invested in these stocks was $168 million. That figure was $72 million in NSIT’s case. WW International, Inc. (NASDAQ:WW) is the most popular stock in this table. On the other hand Hecla Mining Company (NYSE:HL) is the least popular one with only 13 bullish hedge fund positions. Insight Enterprises, Inc. (NASDAQ:NSIT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NSIT is 37.3. 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 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 24.8% in 2020 through the end of third quarter and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on NSIT as the stock returned 15% during Q3 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.