Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Quotient Technology Inc (NYSE:QUOT).
Is Quotient Technology Inc (NYSE:QUOT) a buy right now? Investors who are in the know were becoming more confident. The number of long hedge fund bets increased by 6 in recent months. Quotient Technology Inc (NYSE:QUOT) was in 25 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that QUOT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 19 hedge funds in our database with QUOT holdings at the end of December.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to view the new hedge fund action regarding Quotient Technology Inc (NYSE:QUOT).
Do Hedge Funds Think QUOT Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32% from the previous quarter. The graph below displays the number of hedge funds with bullish position in QUOT over the last 23 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in Quotient Technology Inc (NYSE:QUOT) was held by Lynrock Lake, which reported holding $193 million worth of stock at the end of December. It was followed by Miller Value Partners with a $103.5 million position. Other investors bullish on the company included Trigran Investments, Samjo Capital, and Ophir Asset Management. In terms of the portfolio weights assigned to each position Samjo Capital allocated the biggest weight to Quotient Technology Inc (NYSE:QUOT), around 29.09% of its 13F portfolio. Lynrock Lake is also relatively very bullish on the stock, setting aside 12.62 percent of its 13F equity portfolio to QUOT.
As one would reasonably expect, key money managers were leading the bulls’ herd. Ophir Asset Management, managed by Steven Ng and Andrew Mitchell, initiated the biggest position in Quotient Technology Inc (NYSE:QUOT). Ophir Asset Management had $31.2 million invested in the company at the end of the quarter. Josh Goldberg’s G2 Investment Partners Management also made a $8.2 million investment in the stock during the quarter. The other funds with brand new QUOT positions are Warren Lammert’s Granite Point Capital, George McCabe’s Portolan Capital Management, and Christopher Hillary’s Roubaix Capital.
Let’s now review hedge fund activity in other stocks similar to Quotient Technology Inc (NYSE:QUOT). We will take a look at Ichor Holdings Ltd. (NASDAQ:ICHR), Industrial Logistics Properties Trust (NASDAQ:ILPT), Travere Therapeutics, Inc. (NASDAQ:TVTX), Alphatec Holdings Inc (NASDAQ:ATEC), Compass Diversified (NYSE:CODI), PGT Innovations Inc. (NYSE:PGTI), and Dine Brands Global, Inc. (NYSE:DIN). This group of stocks’ market values resemble QUOT’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 15.9 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $581 million in QUOT’s case. Dine Brands Global, Inc. (NYSE:DIN) is the most popular stock in this table. On the other hand Compass Diversified (NYSE:CODI) is the least popular one with only 5 bullish hedge fund positions. Quotient Technology Inc (NYSE:QUOT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for QUOT is 83.5. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately QUOT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on QUOT were disappointed as the stock returned -32.1% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.