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 Ebix Inc (NASDAQ:EBIX).
Is Ebix Inc (NASDAQ:EBIX) ready to rally soon? The smart money is becoming hopeful. The number of bullish hedge fund bets advanced by 4 recently. EBIX was in 18 hedge funds’ portfolios at the end of the third quarter of 2016. There were 14 hedge funds in our database with EBIX holdings at the end of the previous quarter. At the end of this article we will also compare EBIX to other stocks including Dana Holding Corporation (NYSE:DAN), DineEquity Inc (NYSE:DIN), and Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Hedge fund activity in Ebix Inc (NASDAQ:EBIX)
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 29% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in EBIX at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Claus Moller’s P2 Capital Partners has the biggest position in Ebix Inc (NASDAQ:EBIX), worth close to $92.9 million, comprising 14.6% of its total 13F portfolio. Coming in second is D. E. Shaw’s D E Shaw, which holds a $15.4 million position. Other hedge funds and institutional investors that are bullish consist of James A. Mitarotonda’s Barington Capital Group, and Chuck Royce’s Royce & Associates. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Weatherbie Capital assembled the biggest position in Ebix Inc (NASDAQ:EBIX). Weatherbie Capital had $8.2 million invested in the company at the end of the quarter. George McCabe’s Portolan Capital Management also made a $4.1 million investment in the stock during the quarter. The following funds were also among the new EBIX investors: Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management, and Warren Lammert’s Granite Point Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ebix Inc (NASDAQ:EBIX) but similarly valued. We will take a look at Dana Holding Corporation (NYSE:DAN), DineEquity Inc (NYSE:DIN), Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV), and Semtech Corporation (NASDAQ:SMTC). This group of stocks’ market caps are closest to EBIX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DAN | 26 | 381367 | -1 |
| DIN | 16 | 106871 | 0 |
| EVV | 3 | 4448 | -1 |
| SMTC | 17 | 82951 | 4 |
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 $144 million. That figure was $163 million in EBIX’s case. Dana Holding Corporation (NYSE:DAN) is the most popular stock in this table. On the other hand Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV) is the least popular one with only 3 bullish hedge fund positions. Ebix Inc (NASDAQ:EBIX) 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 DAN might be a better candidate to consider taking a long position in.
Disclosure: None
