Is NSP Stock A Buy or Sell?
Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Insperity Inc (NYSE:NSP) to find out whether there were any major changes in hedge funds' views.
Is NSP stock a buy? Insperity Inc (NYSE:NSP) investors should pay attention to an increase in hedge fund interest of late. Insperity Inc (NYSE:NSP) was in 25 hedge funds' portfolios at the end of December. The all time high for this statistic is 29. Our calculations also showed that NSP isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Larry Robbins of Glenview CapitalLarry Robbins
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Now let's take a glance at the fresh hedge fund action encompassing Insperity Inc (NYSE:NSP).
Do Hedge Funds Think NSP Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in NSP over the last 22 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Lakewood Capital Management held the most valuable stake in Insperity Inc (NYSE:NSP), which was worth $62.6 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $29 million worth of shares. No Street Capital, Sunriver Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Value Holdings LP allocated the biggest weight to Insperity Inc (NYSE:NSP), around 5.06% of its 13F portfolio. Sunriver Management is also relatively very bullish on the stock, setting aside 3.34 percent of its 13F equity portfolio to NSP.
Now, specific money managers were breaking ground themselves. Glenview Capital, managed by Larry Robbins, created the most outsized position in Insperity Inc (NYSE:NSP). Glenview Capital had $13 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $2.2 million investment in the stock during the quarter. The following funds were also among the new NSP investors: Chuck Royce's Royce & Associates, Jinghua Yan's TwinBeech Capital, and Mika Toikka's AlphaCrest Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Insperity Inc (NYSE:NSP) but similarly valued. These stocks are Meritage Homes Corp (NYSE:MTH), Kirby Corporation (NYSE:KEX), Focus Financial Partners Inc. (NASDAQ:FOCS), White Mountains Insurance Group Ltd (NYSE:WTM), Allegiant Travel Company (NASDAQ:ALGT), Compania de Minas Buenaventura S.A.A. (NYSE:BVN), and National Health Investors Inc (NYSE:NHI). This group of stocks' market caps match NSP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MTH,30,269053,5 KEX,22,554064,-12 FOCS,9,45969,-2 WTM,16,225863,-1 ALGT,19,416711,-5 BVN,8,121739,0 NHI,13,57645,1 Average,16.7,241578,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.7 hedge funds with bullish positions and the average amount invested in these stocks was $242 million. That figure was $227 million in NSP's case. Meritage Homes Corp (NYSE:MTH) is the most popular stock in this table. On the other hand Compania de Minas Buenaventura S.A.A. (NYSE:BVN) is the least popular one with only 8 bullish hedge fund positions. Insperity Inc (NYSE:NSP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NSP is 70.5. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately NSP wasn't nearly as popular as these 30 stocks and hedge funds that were betting on NSP were disappointed as the stock returned 7% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
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