How do we determine whether Aspen Technology, Inc. (NASDAQ:AZPN) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Aspen Technology, Inc. (NASDAQ:AZPN) was in 28 hedge funds’ portfolios at the end of September. AZPN has experienced an increase in enthusiasm from smart money in recent months. There were 26 hedge funds in our database with AZPN positions at the end of the previous quarter. Our calculations also showed that AZPN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). AZPN isn’t popular among ETF sponsors either. Currently there is only one ETF with at least 1% weight in this stock: iShares Edge MSCI Multifactor USA Small-Cap ETF (NYSE:SMLF).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ken Fisher of Fisher Asset Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the latest hedge fund action surrounding Aspen Technology, Inc. (NASDAQ:AZPN).
How are hedge funds trading Aspen Technology, Inc. (NASDAQ:AZPN)?
Heading into the fourth quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in AZPN over the last 17 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Aspen Technology, Inc. (NASDAQ:AZPN), which was worth $292.7 million at the end of the third quarter. On the second spot was Alkeon Capital Management which amassed $250.7 million worth of shares. Fisher Asset Management, Citadel Investment Group, and Two Creeks 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 Two Creeks Capital Management allocated the biggest weight to Aspen Technology, Inc. (NASDAQ:AZPN), around 5.89% of its portfolio. Waratah Capital Advisors is also relatively very bullish on the stock, designating 2.09 percent of its 13F equity portfolio to AZPN.
As aggregate interest increased, key hedge funds have jumped into Aspen Technology, Inc. (NASDAQ:AZPN) headfirst. Waratah Capital Advisors, managed by Brad Dunkley and Blair Levinsky, assembled the largest position in Aspen Technology, Inc. (NASDAQ:AZPN). Waratah Capital Advisors had $20.8 million invested in the company at the end of the quarter. Greg Poole’s Echo Street Capital Management also made a $11.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, John Overdeck and David Siegel’s Two Sigma Advisors, and Matthew Tewksbury’s Stevens Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Aspen Technology, Inc. (NASDAQ:AZPN). These stocks are Westlake Chemical Corporation (NYSE:WLK), Cognex Corporation (NASDAQ:CGNX), News Corp (NASDAQ:NWS), and Avantor, Inc. (NYSE:AVTR). This group of stocks’ market caps are closest to AZPN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WLK | 18 | 352906 | -5 |
| CGNX | 18 | 179338 | 5 |
| NWS | 11 | 33867 | 2 |
| AVTR | 26 | 524476 | -4 |
| Average | 18.25 | 272647 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $273 million. That figure was $1267 million in AZPN’s case. Avantor, Inc. (NYSE:AVTR) is the most popular stock in this table. On the other hand News Corp (NASDAQ:NWS) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Aspen Technology, Inc. (NASDAQ:AZPN) is more popular among hedge funds. 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. Unfortunately AZPN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AZPN were disappointed as the stock returned 1.9% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
