Hedge Funds Are Souring On Volt Information Sciences, Inc. (VOLT)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Volt Information Sciences, Inc. (NYSE:VOLT).

Volt Information Sciences, Inc. (NYSE:VOLT) investors should pay attention to a decrease in hedge fund sentiment of late. Our calculations also showed that VOLT 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.

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 51 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the latest hedge fund action encompassing Volt Information Sciences, Inc. (NYSE:VOLT).

How have hedgies been trading Volt Information Sciences, Inc. (NYSE:VOLT)?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VOLT over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is VOLT A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Archon Capital Management, managed by Constantinos J. Christofilis, holds the most valuable position in Volt Information Sciences, Inc. (NYSE:VOLT). Archon Capital Management has a $0.6 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies,  holding a $0.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish comprise Matthew Hulsizer’s PEAK6 Capital Management, David P. Cohen’s Minerva Advisors and . In terms of the portfolio weights assigned to each position Archon Capital Management allocated the biggest weight to Volt Information Sciences, Inc. (NYSE:VOLT), around 0.21% of its 13F portfolio. Minerva Advisors is also relatively very bullish on the stock, dishing out 0.08 percent of its 13F equity portfolio to VOLT.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Arrowstreet Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified VOLT as a viable investment and initiated a position in the stock.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Volt Information Sciences, Inc. (NYSE:VOLT) but similarly valued. These stocks are Bionano Genomics, Inc. (NASDAQ:BNGO), NovaBay Pharmaceuticals, Inc. (NYSE:NBY), RCM Technologies, Inc. (NASDAQ:RCMT), and Duos Technologies Group, Inc. (NASDAQ:DUOT). This group of stocks’ market valuations match VOLT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BNGO 1 529 0
NBY 1 45 0
RCMT 2 1158 0
DUOT 1 140 1
Average 1.25 468 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 1.25 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $1 million in VOLT’s case. RCM Technologies, Inc. (NASDAQ:RCMT) is the most popular stock in this table. On the other hand Bionano Genomics, Inc. (NASDAQ:BNGO) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Volt Information Sciences, Inc. (NYSE:VOLT) is more popular among hedge funds. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately VOLT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on VOLT were disappointed as the stock returned 7.4% during the second quarter (through the end of May) 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.

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