The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtDescartes Systems Group (NASDAQ:DSGX) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Descartes Systems Group (NASDAQ:DSGX) investors should be aware of a decrease in activity from the world’s largest hedge funds lately. Our calculations also showed that DSGX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are plenty of indicators stock traders have at their disposal to evaluate publicly traded companies. A duo of the most underrated indicators are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the elite fund managers can outperform the S&P 500 by a solid margin (see the details here).
Chuck Royce of Royce & Associates
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the key hedge fund action surrounding Descartes Systems Group (NASDAQ:DSGX).
Hedge fund activity in Descartes Systems Group (NASDAQ:DSGX)
Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the fourth quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in DSGX a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Echo Street Capital Management held the most valuable stake in Descartes Systems Group (NASDAQ:DSGX), which was worth $53.7 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $22.8 million worth of shares. Royce & Associates, Akre Capital Management, and D E Shaw 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 Echo Street Capital Management allocated the biggest weight to Descartes Systems Group (NASDAQ:DSGX), around 1.16% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.2 percent of its 13F equity portfolio to DSGX.
Seeing as Descartes Systems Group (NASDAQ:DSGX) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds who sold off their entire stakes last quarter. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management cut the biggest investment of the 750 funds followed by Insider Monkey, totaling about $1.3 million in stock. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $0.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Descartes Systems Group (NASDAQ:DSGX) but similarly valued. These stocks are NeoGenomics, Inc. (NASDAQ:NEO), Virgin Galactic Holdings, Inc. (NYSE:SPCE), Hess Midstream LP (NYSE:HESM), and Immunomedics, Inc. (NASDAQ:IMMU). This group of stocks’ market values are similar to DSGX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NEO | 11 | 51026 | -1 |
| SPCE | 12 | 55139 | -20 |
| HESM | 5 | 5430 | -4 |
| IMMU | 27 | 701345 | -1 |
| Average | 13.75 | 203235 | -6.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $104 million in DSGX’s case. Immunomedics, Inc. (NASDAQ:IMMU) is the most popular stock in this table. On the other hand Hess Midstream LP (NYSE:HESM) is the least popular one with only 5 bullish hedge fund positions. Descartes Systems Group (NASDAQ:DSGX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on DSGX as the stock returned 53.8% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
