The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards American Software, Inc. (NASDAQ:AMSWA).
Is American Software, Inc. (NASDAQ:AMSWA) a first-rate stock to buy now? Prominent investors were taking a bearish view. The number of bullish hedge fund bets decreased by 2 recently. American Software, Inc. (NASDAQ:AMSWA) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 12. Our calculations also showed that AMSWA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 8 hedge funds in our database with AMSWA holdings at the end of December.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s review the new hedge fund action regarding American Software, Inc. (NASDAQ:AMSWA).
Do Hedge Funds Think AMSWA Is A Good Stock To Buy Now?
At the end of March, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AMSWA over the last 23 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in American Software, Inc. (NASDAQ:AMSWA), which was worth $36.6 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $5.6 million worth of shares. Royce & Associates, AQR Capital Management, and Two Sigma Advisors 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 Renaissance Technologies allocated the biggest weight to American Software, Inc. (NASDAQ:AMSWA), around 0.05% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to AMSWA.
Seeing as American Software, Inc. (NASDAQ:AMSWA) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedgies that elected to cut their full holdings in the first quarter. At the top of the heap, David Harding’s Winton Capital Management sold off the largest position of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $0.4 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund cut about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds in the first quarter.
Let’s also examine hedge fund activity in other stocks similar to American Software, Inc. (NASDAQ:AMSWA). These stocks are Albireo Pharma, Inc. (NASDAQ:ALBO), The RMR Group Inc. (NASDAQ:RMR), Qiwi PLC (NASDAQ:QIWI), Kadmon Holdings, Inc. (NYSE:KDMN), GAN Limited (NASDAQ:GAN), iHuman Inc. (NYSE:IH), and Zepp Health Corporation (NYSE:ZEPP). All of these stocks’ market caps are similar to AMSWA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALBO | 15 | 170627 | -2 |
| RMR | 16 | 100223 | -1 |
| QIWI | 5 | 18584 | -4 |
| KDMN | 24 | 286093 | -7 |
| GAN | 11 | 64056 | -11 |
| IH | 1 | 371 | -3 |
| ZEPP | 5 | 4780 | 1 |
| Average | 11 | 92105 | -3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $92 million. That figure was $47 million in AMSWA’s case. Kadmon Holdings, Inc. (NYSE:KDMN) is the most popular stock in this table. On the other hand iHuman Inc. (NYSE:IH) is the least popular one with only 1 bullish hedge fund positions. American Software, Inc. (NASDAQ:AMSWA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMSWA is 28.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on AMSWA, though not to the same extent, as the stock returned 11.5% since the end of Q1 (through June 25th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
