We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Forrester Research, Inc. (NASDAQ:FORR) based on that data.
Is Forrester Research, Inc. (NASDAQ:FORR) undervalued? Investors who are in the know are becoming less hopeful. The number of bullish hedge fund bets shrunk by 2 in recent months. Our calculations also showed that FORR 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). FORR was in 8 hedge funds’ portfolios at the end of March. There were 10 hedge funds in our database with FORR positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most traders, hedge funds are viewed as unimportant, old financial vehicles of the past. While there are over 8000 funds with their doors open today, Our experts choose to focus on the masters of this club, about 850 funds. Most estimates calculate that this group of people have their hands on most of the smart money’s total asset base, and by tracking their highest performing investments, Insider Monkey has unearthed numerous investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s go over the recent hedge fund action regarding Forrester Research, Inc. (NASDAQ:FORR).
What does smart money think about Forrester Research, Inc. (NASDAQ:FORR)?
At Q1’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FORR over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Forrester Research, Inc. (NASDAQ:FORR), with a stake worth $28.9 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $21.7 million. Citadel Investment Group, GLG Partners, and D E Shaw 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 Royce & Associates allocated the biggest weight to Forrester Research, Inc. (NASDAQ:FORR), around 0.3% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to FORR.
Judging by the fact that Forrester Research, Inc. (NASDAQ:FORR) has faced falling interest from hedge fund managers, we can see that there were a few funds who sold off their positions entirely in the first quarter. Interestingly, Cliff Asness’s AQR Capital Management sold off the biggest investment of all the hedgies followed by Insider Monkey, comprising close to $0.7 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund cut about $0.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds in the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Forrester Research, Inc. (NASDAQ:FORR) but similarly valued. These stocks are BrightSphere Investment Group Inc. (NYSE:BSIG), Usa Compression Partners LP (NYSE:USAC), Lakeland Bancorp, Inc. (NASDAQ:LBAI), and Arbor Realty Trust, Inc. (NYSE:ABR). This group of stocks’ market valuations match FORR’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $56 million in FORR’s case. BrightSphere Investment Group Inc. (NYSE:BSIG) is the most popular stock in this table. On the other hand Usa Compression Partners LP (NYSE:USAC) is the least popular one with only 5 bullish hedge fund positions. Forrester Research, Inc. (NASDAQ:FORR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately FORR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FORR investors were disappointed as the stock returned 7.3% during the second quarter 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.