Insperity Stock Down 55% From Highs as Hedge Fund Buys $13 Million Stake — Is It A Turnaround Bet?

NSP -0.23%

Key Points

• Connecticut-based Stadium Capital Management added 263,715 shares of Insperity worth $13 million in the third quarter.

• The transaction represented a new position for Stadium Capital, which reported holding no shares of Insperity in the previous period.

• NSP is now the fund’s fourth-largest holding, accounting for nearly 14% of total AUM.

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Connecticut-based Stadium Capital Management initiated a new position in Insperity (NSP), adding 263,715 shares valued at approximately $13 million during the third quarter, according to a November 14 SEC filing.

What Happened

According to a Securities and Exchange Commission (SEC) filing dated November 14, Stadium Capital Management disclosed a new position in Insperity (NYSE:NSP). The firm reported ownership of 263,715 shares with a market value of $13 million as of September 30. This addition accounted for 13.9% of the fund’s $93.6 million in reportable U.S. equity assets at quarter-end.

What Else to Know

Top holdings after the filing:

• NYSE:BLDR: $22.2 million (23.7% of AUM)

• NYSE:BC: $19.5 million (20.8% of AUM)

• NASDAQ:SNBR: $18.4 million (19.6% of AUM)

• NYSE:NSP: $13 million (13.9% of AUM)

• NYSE:LCII: $8.9 million (9.6% of AUM)

As of Friday, shares were priced at $35.37, down 55% over one year and well underperforming the S&P 500, which is up 14% in the same period.

Company Overview

Metric

Value

Revenue (TTM)

$6.8 billion

Net Income (TTM)

$17 million

Dividend Yield

7%

Price (as of market close Friday)

$35.37

Company Snapshot

Insperity provides human resources outsourcing, payroll administration, employee benefits, compliance, and cloud-based HR management solutions. It generates revenue primarily through service fees for HR outsourcing and support, leveraging a scalable platform to serve small and medium-sized businesses. The firm targets small and mid-sized enterprises across the United States seeking comprehensive HR and workforce management solutions. Its competitive advantage lies in its full-service platform, enabling clients to streamline HR operations and focus on core business growth.

Foolish Take

This move seemingly signals a meaningful shift toward value hunting in a sector facing real cyclical and cost pressures. Insperity’s stock has fallen sharply over the past year as rising healthcare costs eroded margins, yet the company’s new multi-year contract with UnitedHealthcare—expected to materially reduce large-claim cost exposure starting in 2026—could reset its earnings trajectory. Stadium Capital’s sizable new position suggests confidence that the business is positioned for operational recovery rather than structural decline.The firm’s $13 million investment makes Insperity its fourth-largest equity holding, a notable allocation given the fund’s typically concentrated profile. While revenue rose 4% last quarter to $1.6 billion, elevated healthcare costs pushed the quarter to a $20 million net loss, and adjusted EBITDA fell to $10 million—down sharply from last year. Nevertheless, management highlighted meaningful progress on cost controls and the upcoming benefits of the UnitedHealthcare agreement, which lowers the pooling level for large claims to $500,000 beginning in 2026.Ultimately, Insperity shares, down 55% over the past year, are priced as if conditions won’t improve. But for investors who believe in the company’s long-term recurring-revenue model and its scalable HR services platform, this pullback could be an opportunity.

Glossary

Assets Under Management (AUM): The total market value of investments managed by a fund or investment firm.13F Reportable AUM: The portion of a fund’s assets that must be disclosed in quarterly SEC Form 13F filings, covering U.S. equity holdings.Position: The amount of a particular security or asset held in a portfolio by an investor or fund.Dividend Yield: Annual dividends paid by a company divided by its current share price, shown as a percentage.Trailing Twelve Months (TTM): The 12-month period ending with the most recent quarterly report.Stake: The ownership interest or number of shares a fund or investor holds in a company.Human Resources Outsourcing: Contracting external providers to handle HR functions like payroll, benefits, and compliance for a business.Scalable Platform: A system or service that can efficiently handle increased workload or growth without losing performance.Service Fees: Charges paid by clients to a company for providing specific services, often recurring.Integrated HR Technology: Software solutions that combine various human resources functions into a single, unified platform.Full-Service Platform: A comprehensive solution offering a wide range of related services or features within one system.

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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Brunswick, LCI Industries, and Sleep Number. The Motley Fool has a disclosure policy.

Insperity Stock Down 55% From Highs as Hedge Fund Buys $13 Million Stake — Is It A Turnaround Bet? was originally published by The Motley Fool