Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Guidewire Software Inc (NYSE:GWRE) has seen an increase in activity from the world’s largest hedge funds of late. GWRE was in 22 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with GWRE positions at the end of the previous quarter. At the end of this article we will also compare GWRE to other stocks including Taubman Centers, Inc. (NYSE:TCO), Toll Brothers Inc (NYSE:TOL), and Gentex Corporation (NASDAQ:GNTX) to get a better sense of its popularity.
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What have hedge funds been doing with Guidewire Software Inc (NYSE:GWRE)?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a 29% jump from the previous quarter, as hedge fund ownership of the stock soars to a new yearly high. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Matthew Iorio’s White Elm Capital has the most valuable position in Guidewire Software Inc (NYSE:GWRE), worth close to $28.3 million, comprising 3.6% of its total 13F portfolio. On White Elm Capital’s heels is Millennium Management, led by Israel Englander, holding a $25.1 million position. Other members of the smart money that hold long positions encompass Jim Simons’ Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Dmitry Balyasny’s Balyasny Asset Management.
As aggregate interest increased, specific money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, created the largest position in Guidewire Software Inc (NYSE:GWRE). Two Sigma Advisors had $4.2 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also made a $3.8 million investment in the stock during the quarter. The following funds were also among the new GWRE investors: George Hall’s Clinton Group, D E Shaw, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Guidewire Software Inc (NYSE:GWRE) but similarly valued. These stocks are Taubman Centers, Inc. (NYSE:TCO), Toll Brothers Inc (NYSE:TOL), Gentex Corporation (NASDAQ:GNTX), and IAC/InterActiveCorp (NASDAQ:IAC). This group of stocks’ market valuations match GWRE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TCO | 19 | 436312 | 1 |
| TOL | 29 | 329585 | 1 |
| GNTX | 23 | 225660 | 3 |
| IAC | 31 | 1291066 | -4 |
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $571 million. That figure was $119 million in GWRE’s case. IAC/InterActiveCorp (NASDAQ:IAC) is the most popular stock in this table. On the other hand Taubman Centers, Inc. (NYSE:TCO) is the least popular one with only 19 bullish hedge fund positions. Guidewire Software Inc (NYSE:GWRE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds really love. In this regard IAC might be a better candidate to consider a long position in.
Disclosure: None
