Is Amdocs Limited (NASDAQ:DOX) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Amdocs Limited (NASDAQ:DOX) investors should pay attention to an increase in hedge fund interest recently. Amdocs Limited (NASDAQ:DOX) was in 32 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DOX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Richard S. Pzena of Pzena Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. With all of this in mind we’re going to review the fresh hedge fund action surrounding Amdocs Limited (NASDAQ:DOX).
Do Hedge Funds Think DOX Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DOX over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Amdocs Limited (NASDAQ:DOX) was held by Pzena Investment Management, which reported holding $313.5 million worth of stock at the end of December. It was followed by AQR Capital Management with a $113.2 million position. Other investors bullish on the company included Ariel Investments, Point72 Asset Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Running Oak Capital allocated the biggest weight to Amdocs Limited (NASDAQ:DOX), around 1.61% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, earmarking 1.27 percent of its 13F equity portfolio to DOX.
As industrywide interest jumped, key money managers have been driving this bullishness. Intermede Investment Partners, managed by Barry Dargan, assembled the most outsized position in Amdocs Limited (NASDAQ:DOX). Intermede Investment Partners had $10.1 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $5.8 million investment in the stock during the quarter. The other funds with brand new DOX positions are Paul Tudor Jones’s Tudor Investment Corp, Qing Li’s Sciencast Management, and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Amdocs Limited (NASDAQ:DOX) but similarly valued. These stocks are CRISPR Therapeutics AG (NASDAQ:CRSP), Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI), BridgeBio Pharma, Inc. (NASDAQ:BBIO), Pinnacle West Capital Corporation (NYSE:PNW), AngloGold Ashanti Limited (NYSE:AU), AbCellera Biologics Inc. (NASDAQ:ABCL), and Jones Lang LaSalle Inc (NYSE:JLL). This group of stocks’ market valuations are similar to DOX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRSP | 27 | 1407504 | -7 |
| MRVI | 26 | 401044 | -8 |
| BBIO | 26 | 2899063 | 3 |
| PNW | 15 | 145574 | -9 |
| AU | 14 | 319512 | -3 |
| ABCL | 20 | 1842948 | -5 |
| JLL | 20 | 1241101 | -3 |
| Average | 21.1 | 1179535 | -4.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $1180 million. That figure was $717 million in DOX’s case. CRISPR Therapeutics AG (NASDAQ:CRSP) is the most popular stock in this table. On the other hand AngloGold Ashanti Limited (NYSE:AU) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Amdocs Limited (NASDAQ:DOX) is more popular among hedge funds. Our overall hedge fund sentiment score for DOX is 90. 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 22.8% in 2021 through July 2nd and still managed to beat the market by 6 percentage points. Hedge funds were also right about betting on DOX, though not to the same extent, as the stock returned 12.3% since the end of March (through July 2nd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
