Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 of 2018 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETFs by nearly 10 percentage points during the first 11 months of 2019. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Paycom Software Inc (NYSE:PAYC) from the perspective of those elite funds.
Paycom Software Inc (NYSE:PAYC) shareholders have witnessed an increase in hedge fund interest recently. Our calculations also showed that PAYC 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.
In today’s marketplace there are a lot of tools shareholders employ to assess stocks. A pair of the less utilized tools are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top money managers can outpace their index-focused peers by a significant amount (see the details here).
John Overdeck of Two Sigma Advisors
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to analyze the fresh hedge fund action regarding Paycom Software Inc (NYSE:PAYC).
Hedge fund activity in Paycom Software Inc (NYSE:PAYC)
Heading into the fourth quarter of 2019, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the second quarter of 2019. By comparison, 23 hedge funds held shares or bullish call options in PAYC a year ago. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Paycom Software Inc (NYSE:PAYC) was held by Citadel Investment Group, which reported holding $73.7 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $59 million position. Other investors bullish on the company included Arrowstreet Capital, Fisher Asset Management, and Echo Street Capital Management. In terms of the portfolio weights assigned to each position Navellier & Associates allocated the biggest weight to Paycom Software Inc (NYSE:PAYC), around 2.32% of its portfolio. Mondrian Capital is also relatively very bullish on the stock, designating 1.97 percent of its 13F equity portfolio to PAYC.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Moore Global Investments, managed by Louis Bacon, created the largest position in Paycom Software Inc (NYSE:PAYC). Moore Global Investments had $7.3 million invested in the company at the end of the quarter. John Brandmeyer’s Cognios Capital also made a $1.8 million investment in the stock during the quarter. The other funds with brand new PAYC positions are Benjamin A. Smith’s Laurion Capital Management, Matthew Tewksbury’s Stevens Capital Management, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Paycom Software Inc (NYSE:PAYC) but similarly valued. These stocks are Liberty Global Plc (NASDAQ:LBTYK), Fidelity National Financial Inc (NYSE:FNF), Equity Lifestyle Properties, Inc. (NYSE:ELS), and Vornado Realty Trust (NYSE:VNO). This group of stocks’ market values match PAYC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LBTYK | 38 | 3404866 | 4 |
| FNF | 28 | 340609 | -1 |
| ELS | 19 | 521910 | 1 |
| VNO | 32 | 724917 | 5 |
| Average | 29.25 | 1248076 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $1248 million. That figure was $414 million in PAYC’s case. Liberty Global Plc (NASDAQ:LBTYK) is the most popular stock in this table. On the other hand Equity Lifestyle Properties, Inc. (NYSE:ELS) is the least popular one with only 19 bullish hedge fund positions. Paycom Software Inc (NYSE:PAYC) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on PAYC as the stock returned 32.1% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
