The fourth quarter was a rough one for most investors, as fears of a rising interest rate environment in the U.S, a trade war with China, and a more or less stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards NIC Inc. (NASDAQ:EGOV), and what that likely means for the prospects of the company and its stock.
NIC Inc. (NASDAQ:EGOV) was in 18 hedge funds’ portfolios at the end of the third quarter of 2018. EGOV investors should be aware of an increase in support from the world’s most elite money managers lately. There were 15 hedge funds in our database with EGOV holdings at the end of the previous quarter. Our calculations also showed that EGOV isn’t among the 30 most popular stocks among hedge funds.
At the moment there are a lot of formulas stock traders can use to evaluate publicly traded companies. A duo of the most under-the-radar formulas are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the S&P 500 by a significant margin (see the details here).
We’re going to go over the recent hedge fund action encompassing NIC Inc. (NASDAQ:EGOV).
Hedge fund activity in NIC Inc. (NASDAQ:EGOV)
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards EGOV over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, D E Shaw was the largest shareholder of NIC Inc. (NASDAQ:EGOV), with a stake worth $15.9 million reported as of the end of September. Trailing D E Shaw was Millennium Management, which amassed a stake valued at $12.9 million. GLG Partners, Citadel Investment Group, and Marshall Wace LLP were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, some big names have jumped into NIC Inc. (NASDAQ:EGOV) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in NIC Inc. (NASDAQ:EGOV). Marshall Wace LLP had $6.4 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also initiated a $1.1 million position during the quarter. The following funds were also among the new EGOV investors: Jim Simons’s Renaissance Technologies, Ken Griffin’s Citadel Investment Group, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s go over hedge fund activity in other stocks similar to NIC Inc. (NASDAQ:EGOV). We will take a look at Enova International Inc (NYSE:ENVA), Kforce Inc. (NASDAQ:KFRC), IRSA Inversiones y Representaciones Sociedad Anónima (NYSE:IRS), and TPI Composites, Inc. (NASDAQ:TPIC). This group of stocks’ market valuations are similar to EGOV’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENVA | 21 | 187946 | -1 |
| KFRC | 20 | 78246 | 4 |
| IRS | 10 | 57298 | -2 |
| TPIC | 17 | 90246 | 1 |
| Average | 17 | 103434 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $70 million in EGOV’s case. Enova International Inc (NYSE:ENVA) is the most popular stock in this table. On the other hand IRSA Inversiones y Representaciones Sociedad Anónima (NYSE:IRS) is the least popular one with only 10 bullish hedge fund positions. NIC Inc. (NASDAQ:EGOV) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ENVA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
