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Hedge Funds Are Crazy About Heidrick & Struggles International, Inc. (HSII)

Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018 as investors first worried over the possible ramifications of rising interest rates and the escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only about 60% S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Heidrick & Struggles International, Inc. (NASDAQ:HSII) and see how the stock is affected by the recent hedge fund activity.

Heidrick & Struggles International, Inc. (NASDAQ:HSII) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. HSII was in 14 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with HSII positions at the end of the previous quarter. Our calculations also showed that HSII isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most stock holders, hedge funds are seen as underperforming, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation at the moment, Our experts hone in on the upper echelon of this group, around 750 funds. These hedge fund managers preside over most of the smart money’s total asset base, and by monitoring their unrivaled equity investments, Insider Monkey has figured out many investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Chuck Royce

Chuck Royce of Royce & Associates

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the fresh hedge fund action encompassing Heidrick & Struggles International, Inc. (NASDAQ:HSII).

What does smart money think about Heidrick & Struggles International, Inc. (NASDAQ:HSII)?

At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HSII over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the biggest position in Heidrick & Struggles International, Inc. (NASDAQ:HSII). Renaissance Technologies has a $33.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is Chuck Royce of Royce & Associates, with a $32.4 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining peers with similar optimism comprise Cliff Asness’s AQR Capital Management, David E. Shaw’s D E Shaw and Paul Marshall and Ian Wace’s Marshall Wace. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Heidrick & Struggles International, Inc. (NASDAQ:HSII), around 0.3% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.05 percent of its 13F equity portfolio to HSII.

As industrywide interest jumped, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, established the largest position in Heidrick & Struggles International, Inc. (NASDAQ:HSII). Millennium Management had $0.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.1 million investment in the stock during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.

Let’s check out hedge fund activity in other stocks similar to Heidrick & Struggles International, Inc. (NASDAQ:HSII). We will take a look at Flexion Therapeutics Inc (NASDAQ:FLXN), MYR Group Inc (NASDAQ:MYRG), WideOpenWest, Inc. (NYSE:WOW), and United Community Financial Corp (NASDAQ:UCFC). This group of stocks’ market values resemble HSII’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FLXN 15 137510 0
MYRG 14 24018 3
WOW 13 19948 5
UCFC 11 38619 2
Average 13.25 55024 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $98 million in HSII’s case. Flexion Therapeutics Inc (NASDAQ:FLXN) is the most popular stock in this table. On the other hand United Community Financial Corp (NASDAQ:UCFC) is the least popular one with only 11 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 calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on HSII as the stock returned 14.2% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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