Analyzing the buying trends of "big money" investors like hedge funds becomes especially interesting when compared with price performance. Have hedge funds been making winning positions? If not, it opens up the question of whether hedge funds have been wrong, or whether they know something the market hasn't yet realized.
Winning streaks are one interesting angle to consider price performance.
Stocks with a persistence of days in which they recently outperformed the S&P 500 and little persistence in recently underperforming the S&P 500 benchmark are very likely surrounded by positive market sentiment.
The screen
To use these concepts, we ran a screen on recently "winning" stocks: those that have seen a persistence of days in which the stock beat the S&P 500 benchmark over the last month and little persistence in underperforming the S&P 500, i.e. long winning streaks and short losing streaks, as measured by a ratio of the longest winning streak to the longest losing streak.
We screened these winners for those seeing the opposite sentiment (bearishness) from institutional investors like hedge funds, with significant net institutional selling over the current quarter.
Clearly hedge funds disagree with the broader market -- do you think hedge funds are wrong, or do they know something the market hasn't yet priced in?
Use this list as a starting point for your own analysis.
List sorted alphabetically. (Click here to access free, interactive tools to analyze these ideas.)
List compiled by Eben Esterhuizen, CFA:
1. AMERIGROUP (NYSE: AGP ) : Operates as a multi-state managed health care company. Net institutional sales in the current quarter at 3.1M shares, which represents about 6.65% of the company's float of 46.65M shares. The stock's average daily alpha vs. the S&P 500 index stands at 1.47% (measured close to close, over the last month). During this period, the longest winning streak lasted 4 days (i.e., the stock's daily returns outperformed the S&P 500 for 4 consecutive days). The longest losing streak lasted 1 day (i.e., a win streak / losing streak ratio of 4.).
2. American Reprographics (NYSE: ARC ) : Provides business-to-business document management services. Net institutional sales in the current quarter at 2.0M shares, which represents about 6.24% of the company's float of 32.05M shares. The stock's average daily alpha vs. the S&P 500 index stands at 0.76% (measured close to close, over the last month). During this period, the longest winning streak lasted 5 days (i.e., the stock's daily returns outperformed the S&P 500 for 5 consecutive days). The longest losing streak lasted 2 days (i.e., a win streak / losing streak ratio of 2.5).
3. CoreLogic (Nasdaq: CLGX ) : Provides property, financial, and consumer information, analytics, and services to mortgage originators and servicers, financial institutions, government and government-sponsored enterprises, and other businesses in the United States. Net institutional sales in the current quarter at 11.7M shares, which represents about 12.28% of the company's float of 95.24M shares. The stock's average daily alpha vs. the S&P 500 index stands at 0.88% (measured close to close, over the last month). During this period, the longest winning streak lasted 6 days (i.e., the stock's daily returns outperformed the S&P 500 for 6 consecutive days). The longest losing streak lasted 2 days (i.e., a win streak / losing streak ratio of 3.).
4. FEI (Nasdaq: FEIC ) : Supplies instruments for nanoscale imaging, analysis, and prototyping that enable research, development, and manufacturing in industrial, academic, and research institutional applications. Net institutional sales in the current quarter at 1.4M shares, which represents about 4% of the company's float of 34.98M shares. The stock's average daily alpha vs. the S&P 500 index stands at 0.96% (measured close to close, over the last month). During this period, the longest winning streak lasted 6 days (i.e., the stock's daily returns outperformed the S&P 500 for 6 consecutive days). The longest losing streak lasted 2 days (i.e., a win streak / losing streak ratio of 3.).
5. Furiex Pharmaceuticals (Nasdaq: FURX ) : Engages in the compound partnering business in the United States and Europe. Net institutional sales in the current quarter at 345.1K shares, which represents about 4.87% of the company's float of 7.09M shares. The stock's average daily alpha vs. the S&P 500 index stands at 1.06% (measured close to close, over the last month). During this period, the longest winning streak lasted 5 days (i.e., the stock's daily returns outperformed the S&P 500 for 5 consecutive days). The longest losing streak lasted 2 days (i.e., a win streak / losing streak ratio of 2.5).
6. Stream Global Services (NYSE: SGS ) : Operates as a global business process outsourcing service provider. Net institutional sales in the current quarter at 35.8M shares, which represents about 61.58% of the company's float of 58.14M shares. The stock's average daily alpha vs. the S&P 500 index stands at 1.7% (measured close to close, over the last month). During this period, the longest winning streak lasted 7 days (i.e., the stock's daily returns outperformed the S&P 500 for 7 consecutive days). The longest losing streak lasted 2 days (i.e., a win streak / losing streak ratio of 3.5).
7. Spreadtrum Communications (Nasdaq: SPRD ) : Operates as a fabless semiconductor company that designs, develops, and markets baseband processor and RF transceiver solutions for wireless communications and mobile television markets. Net institutional sales in the current quarter at 6.0M shares, which represents about 17.75% of the company's float of 33.80M shares. The stock's average daily alpha vs. the S&P 500 index stands at 1.3% (measured close to close, over the last month). During this period, the longest winning streak lasted 7 days (i.e., the stock's daily returns outperformed the S&P 500 for 7 consecutive days). The longest losing streak lasted 2 days (i.e., a win streak / losing streak ratio of 3.5).
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. Data from 11/14. Institutional data sourced from Fidelity, price data sourced from Yahoo! Finance.
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