Here’s What Hedge Funds Think About Huron Consulting Group (HURN)

A market correction in the fourth quarter, spurred by a number of global macroeconomic concerns and rising interest rates ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by nearly 7 percentage points during the fourth quarter. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of Huron Consulting Group (NASDAQ:HURN) during the quarter.

Huron Consulting Group (NASDAQ:HURN) was in 13 hedge funds’ portfolios at the end of December. HURN has experienced an increase in enthusiasm from smart money recently. There were 11 hedge funds in our database with HURN positions at the end of the previous quarter. Our calculations also showed that hurn isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

We’re going to check out the fresh hedge fund action surrounding Huron Consulting Group (NASDAQ:HURN).

What does the smart money think about Huron Consulting Group (NASDAQ:HURN)?

At Q4’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HURN over the last 14 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

No of Hedge Funds with HURN Positions

Among these funds, Renaissance Technologies held the most valuable stake in Huron Consulting Group (NASDAQ:HURN), which was worth $9 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $8.4 million worth of shares. Moreover, D E Shaw, Arrowstreet Capital, and Two Sigma Advisors were also bullish on Huron Consulting Group (NASDAQ:HURN), allocating a large percentage of their portfolios to this stock.

As aggregate interest increased, key hedge funds have jumped into Huron Consulting Group (NASDAQ:HURN) headfirst. Gotham Asset Management, managed by Joel Greenblatt, established the largest position in Huron Consulting Group (NASDAQ:HURN). Gotham Asset Management had $0.9 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also initiated a $0.9 million position during the quarter. The following funds were also among the new HURN investors: Cliff Asness’s AQR Capital Management, Ronald Hua’s Qtron Investments, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s now review hedge fund activity in other stocks similar to Huron Consulting Group (NASDAQ:HURN). These stocks are Glu Mobile Inc. (NASDAQ:GLUU), Loral Space & Communications Inc. (NASDAQ:LORL), Natus Medical Inc (NASDAQ:BABY), and Hertz Global Holdings, Inc. (NYSE:HTZ). This group of stocks’ market valuations match HURN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GLUU 20 108209 -2
LORL 18 564857 -4
BABY 15 96498 -4
HTZ 23 783285 -3
Average 19 388212 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $388 million. That figure was $29 million in HURN’s case. Hertz Global Holdings, Inc. (NYSE:HTZ) is the most popular stock in this table. On the other hand Natus Medical Inc (NASDAQ:BABY) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Huron Consulting Group (NASDAQ:HURN) is even less popular than BABY. Hedge funds dodged a bullet by taking a bearish stance towards HURN. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately HURN wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); HURN investors were disappointed as the stock returned -9.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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