Why Insperity (NSP) Stock Fell 55%—And Why a Prominent Hedge Fund Is Building a Position Anyway

The Hedge Fund’s Bold Move

Connecticut-based Stadium Capital Management made a significant statement in the third quarter: it initiated a fresh position in Insperity (NYSE:NSP) by purchasing 263,715 shares worth approximately $13 million. According to SEC filings dated November 14, this represents a new investment for the firm, which held no NSP shares in the prior quarter. The timing is noteworthy given the stock’s brutal performance.

For investors hunting hedge stocks with contrarian appeal, this move deserves attention. Stadium Capital’s $13 million stake now ranks as its fourth-largest holding, representing 13.9% of the fund’s $93.6 million in reportable U.S. equity holdings as of September 30.

The Stock’s Stunning Decline

The numbers tell a painful story. NSP trades at $35.37 as of Friday’s close—a staggering 55% decline over the past twelve months. While the S&P 500 climbed 14% in the same period, Insperity shareholders have endured a rough ride. The culprit: surging healthcare costs that compressed profit margins and dragged the company into a $20 million net loss last quarter despite generating $1.6 billion in revenue.

This represents a case study in how macro headwinds can devastate even fundamentally sound businesses. Yet it’s precisely this type of beaten-down positioning that attracts sophisticated hedge stock investors like Stadium Capital.

Inside Stadium Capital’s Portfolio

The fund’s top holdings reveal a concentrated, value-oriented strategy:

• 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)

The fact that Insperity ranks fourth suggests the firm believes the company represents meaningful value after its precipitous decline.

Insperity’s Business Model and Financial Position

Insperity operates as a comprehensive human resources outsourcing provider, offering payroll administration, employee benefits management, compliance solutions, and cloud-based HR technology platforms. The company serves small and mid-sized businesses across the United States seeking integrated HR services.

Current Financial Snapshot:

• Revenue (TTM): $6.8 billion
• Net Income (TTM): $17 million
• Dividend Yield: 7%
• Stock Price: $35.37
• 52-Week Performance: -55%

The 7% dividend yield becomes meaningful at these depressed valuations, though earnings sustainability remains the key question.

What’s Changed the Outlook?

While last quarter’s results looked grim—adjusted EBITDA plummeted to just $10 million compared to significantly higher levels a year prior—management highlighted a critical catalyst: a new multi-year contract with UnitedHealthcare effective 2026.

This agreement introduces a pooled claims structure with a $500,000 large-claim threshold starting next year. The implication is substantial: Insperity’s exposure to catastrophic healthcare costs will narrow significantly, potentially restoring margin compression that plagued recent quarters. For a company with recurring revenue from its client base, this structural improvement could mark an inflection point.

The Contrarian Investment Thesis

Stadium Capital’s $13 million allocation appears to embody a straightforward thesis: the market is pricing Insperity as if operational recovery is impossible, when management’s credible cost-control measures and the UnitedHealthcare benefit suggest otherwise.

Revenue ticked up 4% to $1.6 billion last quarter—modest growth but positive. Management’s commentary on cost discipline, combined with the 2026 healthcare contract improvements, creates a plausible path to earnings recovery. For investors comfortable with cyclical downturns and belief in the company’s recurring-revenue scalability, the current valuation resembles a statistical opportunity rather than a value trap.

The stock’s 55% retreat has created a situation where patient capital—the type deployed by experienced hedge funds—can profit from operational inflection and multiple re-rating if execution delivers.

The Bottom Line

Insperity’s tumble reflects real, quantifiable headwinds that deserve respect. But Stadium Capital’s sizable new position signals conviction that those headwinds face meaningful tailwinds ahead. Whether that conviction proves justified depends on cost control delivery and the UnitedHealthcare agreement materializing as expected. For value-oriented hedge stock hunters, the risk-reward profile at current levels warrants closer examination.