Is Information Services Group, Inc. (NASDAQ:III) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Hedge fund interest in Information Services Group, Inc. (NASDAQ:III) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that III isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as MainStreet Bancshares, Inc. (NASDAQ:MNSB), Aesthetic Medical International Holdings Group Ltd. (NASDAQ:AIH), and Enzo Biochem, Inc. (NYSE:ENZ) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are dozens of indicators market participants employ to grade stocks. A duo of the most under-the-radar indicators are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outpace the market by a healthy amount (see the details here).
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 recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind let’s take a look at the new hedge fund action regarding Information Services Group, Inc. (NASDAQ:III).
How are hedge funds trading Information Services Group, Inc. (NASDAQ:III)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards III over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Information Services Group, Inc. (NASDAQ:III) was held by Private Capital Management, which reported holding $13.8 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $4.6 million position. Other investors bullish on the company included Arrowstreet Capital, Zebra Capital Management, and Minerva Advisors. In terms of the portfolio weights assigned to each position Private Capital Management allocated the biggest weight to Information Services Group, Inc. (NASDAQ:III), around 3.16% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.08 percent of its 13F equity portfolio to III.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s go over hedge fund activity in other stocks similar to Information Services Group, Inc. (NASDAQ:III). We will take a look at MainStreet Bancshares, Inc. (NASDAQ:MNSB), Aesthetic Medical International Holdings Group Ltd. (NASDAQ:AIH), Enzo Biochem, Inc. (NYSE:ENZ), Centrus Energy Corp. (NYSE:LEU), Velocity Financial, Inc. (NYSE:VEL), Wayside Technology Group, Inc. (NASDAQ:WSTG), and Partners Bancorp (NASDAQ:PTRS). This group of stocks’ market caps resemble III’s market cap.
|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 3.9 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $19 million in III’s case. Enzo Biochem, Inc. (NYSE:ENZ) is the most popular stock in this table. On the other hand Aesthetic Medical International Holdings Group Ltd. (NASDAQ:AIH) is the least popular one with only 1 bullish hedge fund positions. Information Services Group, Inc. (NASDAQ:III) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for III is 48.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on III as the stock returned 51.2% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.