Healthcare Services Group, Inc. (HCSG): Hedge Funds Are Bearish and Insiders Are Undecided, What Should You Do?
Should Healthcare Services Group, Inc. (NASDAQ:HCSG) investors track the following data?
In the eyes of many investors, hedge funds are seen as useless, old financial tools of a period lost to current times. Although there are over 8,000 hedge funds with their doors open currently, Insider Monkey looks at the top tier of this group, around 525 funds. It is widely held that this group controls the lion's share of all hedge funds' total capital, and by monitoring their best equity investments, we've come up with a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (find the details here).
Just as crucial, bullish insider trading activity is another way to look at the financial markets. Obviously, there are plenty of stimuli for a corporate insider to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this method if investors know what to do (learn more here).
What's more, let's discuss the recent info for Healthcare Services Group, Inc. (NASDAQ:HCSG).
How are hedge funds trading Healthcare Services Group, Inc. (NASDAQ:HCSG)?
Heading into Q3, a total of 7 of the hedge funds we track were bullish in this stock, a change of -30% from the first quarter. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings meaningfully.
Out of the hedge funds we follow, Chuck Royce's Royce & Associates had the most valuable position in Healthcare Services Group, Inc. (NASDAQ:HCSG), worth close to $19.3 million, comprising 0.1% of its total 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $5.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds that are bullish include Richard Driehaus's Driehaus Capital, Ken Griffin's Citadel Investment Group and Brian Ashford-Russell and Tim Woolley's Polar Capital.
Since Healthcare Services Group, Inc. (NASDAQ:HCSG) has faced a fall in interest from the entirety of the hedge funds we track, we can see that there exists a select few fund managers that elected to cut their full holdings last quarter. At the top of the heap, James Dondero's Highland Capital Management dropped the largest stake of the "upper crust" of funds we track, valued at about $0.8 million in stock, and Steven Cohen of SAC Capital Advisors was right behind this move, as the fund dumped about $0.8 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds last quarter.
What have insiders been doing with Healthcare Services Group, Inc. (NASDAQ:HCSG)?
Insider buying made by high-level executives is best served when the company in focus has experienced transactions within the past six months. Over the last half-year time period, Healthcare Services Group, Inc. (NASDAQ:HCSG) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to Healthcare Services Group, Inc. (NASDAQ:HCSG). These stocks are Shutterstock Inc (NYSE:SSTK), Giant Interactive Group Inc (ADR) (NYSE:GA), Fair Isaac Corporation (NYSE:FICO), Zillow Inc (NASDAQ:Z), and The Advisory Board Company (NASDAQ:ABCO). This group of stocks are in the business services industry and their market caps match HCSG's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Shutterstock Inc (NYSE:SSTK)
Giant Interactive Group Inc (ADR) (NYSE:GA)
Fair Isaac Corporation (NYSE:FICO)
Zillow Inc (NASDAQ:Z)
The Advisory Board Company (NASDAQ:ABCO)
Using the returns demonstrated by our studies, regular investors must always keep one eye on hedge fund and insider trading sentiment, and Healthcare Services Group, Inc. (NASDAQ:HCSG) shareholders fit into this picture quite nicely.