The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May and August as this time China pivoted and Trump put more pressure on China by increasing tariffs. Fourth quarter brought optimism to the markets and hedge funds’ top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 37.4% through the end of November, vs. a gain of 27.5% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards Computer Programs & Systems, Inc. (NASDAQ:CPSI), and what that likely means for the prospects of the company and its stock.
Computer Programs & Systems, Inc. (NASDAQ:CPSI) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of the third quarter of 2019. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Select Interior Concepts, Inc. (NASDAQ:SIC), Willis Lease Finance Corporation (NASDAQ:WLFC), and Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) to gather more data points. Our calculations also showed that CPSI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are many metrics investors put to use to assess their stock investments. Some of the best metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top investment managers can outclass their index-focused peers by a very impressive amount (see the details here).
Paul Marshall of Marshall Wace
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to review the latest hedge fund action encompassing Computer Programs & Systems, Inc. (NASDAQ:CPSI).
How have hedgies been trading Computer Programs & Systems, Inc. (NASDAQ:CPSI)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2019. On the other hand, there were a total of 8 hedge funds with a bullish position in CPSI a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Marshall Wace held the most valuable stake in Computer Programs & Systems, Inc. (NASDAQ:CPSI), which was worth $4.8 million at the end of the third quarter. On the second spot was D E Shaw which amassed $3.4 million worth of shares. AQR Capital Management, Polaris Capital Management, and Winton Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fondren Management allocated the biggest weight to Computer Programs & Systems, Inc. (NASDAQ:CPSI), around 0.75% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.17 percent of its 13F equity portfolio to CPSI.
Since Computer Programs & Systems, Inc. (NASDAQ:CPSI) has experienced bearish sentiment from the smart money, it’s easy to see that there was a specific group of fund managers that decided to sell off their full holdings in the third quarter. Intriguingly, Israel Englander’s Millennium Management dumped the biggest stake of the 750 funds tracked by Insider Monkey, totaling an estimated $7.8 million in call options, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $2.4 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Computer Programs & Systems, Inc. (NASDAQ:CPSI) but similarly valued. These stocks are Select Interior Concepts, Inc. (NASDAQ:SIC), Willis Lease Finance Corporation (NASDAQ:WLFC), Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), and Cellcom Israel Ltd. (NYSE:CEL). This group of stocks’ market caps are closest to CPSI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SIC | 14 | 61557 | 5 |
| WLFC | 4 | 26710 | 1 |
| ASPS | 9 | 50131 | 0 |
| CEL | 2 | 10880 | 0 |
| Average | 7.25 | 37320 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $19 million in CPSI’s case. Select Interior Concepts, Inc. (NASDAQ:SIC) is the most popular stock in this table. On the other hand Cellcom Israel Ltd. (NYSE:CEL) is the least popular one with only 2 bullish hedge fund positions. Computer Programs & Systems, Inc. (NASDAQ:CPSI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CPSI as the stock returned 18.1% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
