Do Hedge Funds Love SS&C Technologies Holdings, Inc. (SSNC)?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).

Is SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) a buy, sell, or hold? Investors who are in the know are becoming less confident. The number of long hedge fund positions shrunk by 1 lately. 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 Reliance Steel & Aluminum (NYSE:RS), Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL), and West Pharmaceutical Services Inc. (NYSE:WST) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

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Keeping this in mind, we’re going to take a look at the key action regarding SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).

Hedge fund activity in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC)

At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, down 3% from the second quarter of 2016. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the number one position in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), worth close to $216.1 million and amounting to 1.9% of its total 13F portfolio. On Select Equity Group’s heels is Southpoint Capital Advisors, led by John Smith Clark, holding a $112.5 million stake; 5% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions include David Gallo’s Valinor Management LLC, Thomas Steyer’s Farallon Capital and Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC Management.

Seeing as SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) has witnessed bearish sentiment from the smart money, logic holds that there lies a certain “tier” of hedge funds who were dropping their full holdings in the third quarter. At the top of the heap, James Parsons’s Junto Capital Management cut the biggest stake of the “upper crust” of funds watched by Insider Monkey, totaling close to $20.9 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund cut about $9.7 million worth of shares. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 fund in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) but similarly valued. We will take a look at Reliance Steel & Aluminum (NYSE:RS), Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL), West Pharmaceutical Services Inc. (NYSE:WST), and EnLink Midstream Partners LP (NYSE:ENLK). This group of stocks’ market valuations are closest to SSNC’s market valuation.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was an impressive $1.12 billion in SSNC’s case. Reliance Steel & Aluminum (NYSE:RS) is the most popular stock in this table. On the other hand Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: none.