The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. 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 SPS Commerce, Inc. (NASDAQ:SPSC).
SPS Commerce, Inc. (NASDAQ:SPSC) investors should be aware of a decrease in hedge fund interest recently. SPSC was in 17 hedge funds’ portfolios at the end of the third quarter of 2019. There were 18 hedge funds in our database with SPSC positions at the end of the previous quarter. Our calculations also showed that SPSC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the new hedge fund action encompassing SPS Commerce, Inc. (NASDAQ:SPSC).
What have hedge funds been doing with SPS Commerce, Inc. (NASDAQ:SPSC)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SPSC over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the largest position in SPS Commerce, Inc. (NASDAQ:SPSC), worth close to $36.2 million, corresponding to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Millennium Management, led by Israel Englander, holding a $20.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism encompass Greg Poole’s Echo Street Capital Management, Cliff Asness’s AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Prescott Group Capital Management allocated the biggest weight to SPS Commerce, Inc. (NASDAQ:SPSC), around 0.43% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, dishing out 0.32 percent of its 13F equity portfolio to SPSC.
Judging by the fact that SPS Commerce, Inc. (NASDAQ:SPSC) has experienced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there were a few money managers who were dropping their full holdings by the end of the third quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace cut the largest investment of the “upper crust” of funds followed by Insider Monkey, comprising close to $8.3 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $0.8 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as SPS Commerce, Inc. (NASDAQ:SPSC) but similarly valued. We will take a look at Progress Software Corporation (NASDAQ:PRGS), Patterson Companies, Inc. (NASDAQ:PDCO), Axos Financial, Inc. (NYSE:AX), and McGrath RentCorp (NASDAQ:MGRC). All of these stocks’ market caps are similar to SPSC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRGS | 21 | 206788 | -3 |
| PDCO | 22 | 159641 | -1 |
| AX | 13 | 54561 | -1 |
| MGRC | 21 | 157899 | 3 |
| Average | 19.25 | 144722 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $145 million. That figure was $143 million in SPSC’s case. Patterson Companies, Inc. (NASDAQ:PDCO) is the most popular stock in this table. On the other hand Axos Financial, Inc. (NYSE:AX) is the least popular one with only 13 bullish hedge fund positions. SPS Commerce, Inc. (NASDAQ:SPSC) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on SPSC as the stock returned 19.7% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
