Is Volt Information Sciences, Inc. (VOLT) Going to Burn These Hedge Funds?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Volt Information Sciences, Inc. (NYSE:VOLT)? The smart money sentiment can provide an answer to this question.

Is Volt Information Sciences, Inc. (NYSE:VOLT) undervalued? Hedge funds were getting more optimistic. The number of long hedge fund bets improved by 2 lately. Volt Information Sciences, Inc. (NYSE:VOLT) was in 5 hedge funds’ portfolios at the end of March. The all time high for this statistic is 7. Our calculations also showed that VOLT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 3 hedge funds in our database with VOLT holdings at the end of December.

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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to take a look at the latest hedge fund action surrounding Volt Information Sciences, Inc. (NYSE:VOLT).

Do Hedge Funds Think VOLT Is A Good Stock To Buy Now?

At the end of March, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 67% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in VOLT over the last 23 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in Volt Information Sciences, Inc. (NYSE:VOLT), worth close to $3.4 million, amounting to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Constantinos J. Christofilis of Archon Capital Management, with a $3 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism include David P. Cohen’s Minerva Advisors, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to Volt Information Sciences, Inc. (NYSE:VOLT), around 0.45% of its 13F portfolio. Archon Capital Management is also relatively very bullish on the stock, earmarking 0.42 percent of its 13F equity portfolio to VOLT.

As industrywide interest jumped, key money managers have jumped into Volt Information Sciences, Inc. (NYSE:VOLT) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the largest position in Volt Information Sciences, Inc. (NYSE:VOLT). Two Sigma Advisors had $0.6 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.1 million position during the quarter. The only other fund with a new position in the stock is Ken Griffin’s Citadel Investment Group.

Let’s also examine 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 Kubient, Inc. (NASDAQ:KBNT), Galmed Pharmaceuticals Ltd (NASDAQ:GLMD), Lion Group Holding Ltd. (NASDAQ:LGHL), The Alkaline Water Company Inc. (NASDAQ:WTER), Guaranty Federal Bancshares, Inc. (NASDAQ:GFED), First National Corporation (NASDAQ:FXNC), and Amesite Inc. (NASDAQ:AMST). This group of stocks’ market valuations match VOLT’s market valuation.

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As you can see these stocks had an average of 2.9 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $8 million in VOLT’s case. Galmed Pharmaceuticals Ltd (NASDAQ:GLMD) is the most popular stock in this table. On the other hand Amesite Inc. (NASDAQ:AMST) is the least popular one with only 1 bullish hedge fund positions. Volt Information Sciences, Inc. (NYSE:VOLT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VOLT is 61.8. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately VOLT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VOLT were disappointed as the stock returned 1% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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