The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a 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 Aspen Technology, Inc. (NASDAQ:AZPN), and what that likely means for the prospects of the company and its stock.
Is Aspen Technology, Inc. (NASDAQ:AZPN) a buy here? Money managers are taking an optimistic view. The number of long hedge fund bets advanced by 5 lately. At the end of this article, we will also compare Aspen Technology, Inc. (NASDAQ:AZPN) to other stocks, including VeriFone Systems Inc (NYSE:PAY), New Oriental Education & Tech Grp (ADR) (NYSE:EDU), and Elbit Systems Ltd. (NASDAQ:ESLT) to get a better sense of its popularity.
Follow Aspentech Corp (NASDAQ:AZPN)
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Today, there are numerous indicators investors employ to size up their stock investments. A couple of the less known indicators are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite fund managers can outclass the S&P 500 by a superb amount (see the details here).
Now, we’re going to check out the latest action regarding Aspen Technology, Inc. (NASDAQ:AZPN).
How are hedge funds trading Aspen Technology, Inc. (NASDAQ:AZPN)?
At the end of September, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 19% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Scott McLellan’s Marble Arch Investments has the biggest position in Aspen Technology, Inc. (NASDAQ:AZPN), worth close to $93.6 million, corresponding to 7.2% of its total 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, which holds a $87.3 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish consist of Renaissance Technologies, Robert G. Moses’s RGM Capital, and Panayotis Takis Sparaggis’ Alkeon Capital Management.
As one would reasonably expect, key money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, established the most valuable call position in Aspen Technology, Inc. (NASDAQ:AZPN). Balyasny Asset Management had $3.8 million invested in the company at the end of the quarter. Lee Munder’s Lee Munder Capital Group also initiated a $2.7 million position during the quarter. The other funds with brand new Aspen Technology, Inc. (NASDAQ:AZPN) positions are Neil Chriss’ Hutchin Hill Capital, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s also examine hedge fund activity in other stocks similar to Aspen Technology, Inc. (NASDAQ:AZPN). These stocks are VeriFone Systems Inc (NYSE:PAY), New Oriental Education & Tech Grp (ADR) (NYSE:EDU), Elbit Systems Ltd. (USA) (NASDAQ:ESLT), and Post Properties Inc (NYSE:PPS). This group of stocks’ market valuations are closest to Aspen Technology, Inc. (NASDAQ:AZPN)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PAY | 27 | 147165 | 3 |
| EDU | 15 | 167778 | -7 |
| ESLT | 4 | 10496 | 2 |
| PPS | 18 | 174438 | -3 |
As you can see, these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $478 million in Aspen Technology, Inc. (NASDAQ:AZPN)’s case. VeriFone Systems Inc (NYSE:PAY) is the most popular stock in this table. On the other hand, Elbit Systems Ltd. (USA) (NASDAQ:ESLT) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks, Aspen Technology, Inc. (NASDAQ:AZPN) 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.
