Published on 21 Oct 2021 on Insider Monkey via Yahoo Finance
Were Hedge Funds Right About Selling SelectQuote, Inc. (SLQT)?
Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of SelectQuote, Inc. (NYSE:SLQT).
Is SelectQuote, Inc. (NYSE:SLQT) the right investment to pursue these days? Hedge funds were becoming less confident. The number of bullish hedge fund positions were trimmed by 2 lately. SelectQuote, Inc. (NYSE:SLQT) was in 17 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 29. Our calculations also showed that SLQT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 19 hedge funds in our database with SLQT positions at the end of the fourth quarter.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.