Here’s What Hedge Funds Think About QuinStreet Inc (QNST)

Reymerlyn Martin

Sat, May 4, 2019, 7:41 PM

"Market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity. The receding tide of liquidity will start to reveal more rocks beyond what has been exposed in emerging markets so far, and the value of a value discipline will be in avoiding the biggest capital-destroying rocks. If a rock emerges on the crowded shore of U.S. momentum, it could result in a major liquidity challenge, as momentum is often most intense on the downside as a crowded trade reverses. So investors are facing a large potential trade-off right now: continue to bet on the current dominance of momentum and the S&P 500, or bet on change and take an active value bet in names with attractive value and optionality, but with negative momentum," said Clearbridge Investments in its market commentary. We aren't sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards QuinStreet Inc (NASDAQ:QNST).

QuinStreet Inc (NASDAQ:QNST) investors should pay attention to a decrease in support from the world's most elite money managers lately. Our calculations also showed that QNST isn't among the 30 most popular stocks among hedge funds.

In the 21st century investor’s toolkit there are tons of methods stock market investors can use to size up their stock investments. A couple of the most useful methods are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outpace their index-focused peers by a solid amount (see the details here).

We're going to review the new hedge fund action encompassing QuinStreet Inc (NASDAQ:QNST).

How are hedge funds trading QuinStreet Inc (NASDAQ:QNST)?

At Q4's end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in QNST a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Private Capital Management held the most valuable stake in QuinStreet Inc (NASDAQ:QNST), which was worth $62.6 million at the end of the fourth quarter. On the second spot was Park West Asset Management which amassed $33.3 million worth of shares. Moreover, Driehaus Capital, PAR Capital Management, and Renaissance Technologies were also bullish on QuinStreet Inc (NASDAQ:QNST), allocating a large percentage of their portfolios to this stock.

Since QuinStreet Inc (NASDAQ:QNST) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain "tier" of hedgies that decided to sell off their entire stakes in the third quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP cut the largest investment of all the hedgies watched by Insider Monkey, totaling about $3.8 million in stock. Noam Gottesman's fund, GLG Partners, also dumped its stock, about $1.1 million worth. These moves are interesting, as total hedge fund interest fell by 1 funds in the third quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as QuinStreet Inc (NASDAQ:QNST) but similarly valued. These stocks are The St. Joe Company (NYSE:JOE), Tutor Perini Corp (NYSE:TPC), Career Education Corp. (NASDAQ:CECO), and Kelly Services, Inc. (NASDAQ:KELYA). This group of stocks' market caps are similar to QNST's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JOE,12,383512,-3 TPC,7,6806,0 CECO,22,125143,5 KELYA,10,12918,3 Average,12.75,132095,1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $233 million in QNST's case. Career Education Corp. (NASDAQ:CECO) is the most popular stock in this table. On the other hand Tutor Perini Corp (NYSE:TPC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks QuinStreet Inc (NASDAQ:QNST) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately QNST wasn't nearly as popular as these 15 stock and hedge funds that were betting on QNST were disappointed as the stock returned -16.8% 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.

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