Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 31. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Intersections Inc. (NASDAQ:INTX) shares fell by 32% in the third quarter, which led to a dip in ownership of the stock, down to 6 funds in our database with positions on September 30 from 7 three months earlier. Likewise, the value of their INTX holdings declined by a nearly equal 30%. Nonetheless, investors that we track held 29.40% of Intersections’ shares, so a handful of investors did maintain very bullish positions in the stock. It has rewarded them with 36% gains in the fourth quarter.
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 Christopher & Banks Corporation (NYSE:CBK), Cinedigm Corp (NASDAQ:CIDM), and Northern Dynasty Minerals Ltd. (USA) (NYSEMKT:NAK) to gather more data points.
Today there are many indicators market participants have at their disposal to assess their stock investments. Some of the most useful indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace their index-focused peers by a healthy amount (see the details here).
With all of this in mind, we’re going to take a gander at the recent action encompassing Intersections Inc. (NASDAQ:INTX).
How are hedge funds trading Intersections Inc. (NASDAQ:INTX)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 14% dip from the second quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or had already accumulated large positions).
Of the funds tracked by Insider Monkey, John H Lewis’ Osmium Partners has the number one position in Intersections Inc. (NASDAQ:INTX), worth close to $6.8 million, amounting to 7.8% of its total 13F portfolio. On Osmium Partners’ heels is PEAK6 Capital Management, led by Matthew Hulsizer, holding a $1.9 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions include Paul Solit’s Potomac Capital Management, Renaissance Technologies, and Joseph A. Jolson’s Harvest Capital Strategies.
Since Intersections Inc. (NASDAQ:INTX) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers who were dropping their positions entirely in the third quarter. At the top of the heap, Chuck Royce’s Royce & Associates dropped the biggest investment of the 700 funds tracked by Insider Monkey, valued at close to $1.2 million in shares underlying call options.
Let’s now take a look at hedge fund activity in other stocks similar to Intersections Inc. (NASDAQ:INTX). These stocks are Christopher & Banks Corporation (NYSE:CBK), Cinedigm Corp (NASDAQ:CIDM), Northern Dynasty Minerals Ltd. (USA) (NYSEMKT:NAK), and Smith Micro Software, Inc. (NASDAQ:SMSI). This group of stocks’ market caps are similar to INTX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $12 million in INTX’s case. Cinedigm Corp (NASDAQ:CIDM) is the most popular stock in this table. On the other hand Northern Dynasty Minerals Ltd. (USA) (NYSEMKT:NAK) is the least popular one with only 4 bullish hedge fund positions. Intersections Inc. (NASDAQ:INTX) is not the most popular stock in this group but hedge fund interest is still above average and there is far more money invested in it than in any of the other four stocks. This is a positive signal, one which we believe warrants a deeper look at the stock and consideration for addition to one’s portfolio.