The market has been volatile in the last 6 months as the Federal Reserve continued its rate hikes and then abruptly reversed its stance and uncertainty looms over trade negotiations with China. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 9 percentage points. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, though some funds increased their exposure dramatically at the end of Q4 and the beginning of Q1. In this article, we analyze what the smart money thinks of American Software, Inc. (NASDAQ:AMSWA) and find out how it is affected by hedge funds’ moves.
American Software, Inc. (NASDAQ:AMSWA) shareholders have witnessed an increase in hedge fund interest lately. AMSWA was in 11 hedge funds’ portfolios at the end of the first quarter of 2019. There were 8 hedge funds in our database with AMSWA positions at the end of the previous quarter. Our calculations also showed that amswa isn’t among the 30 most popular stocks among hedge funds.
To most stock holders, hedge funds are perceived as unimportant, old investment tools of yesteryear. While there are more than 8000 funds in operation at present, Our experts choose to focus on the top tier of this group, around 750 funds. These hedge fund managers command the lion’s share of the hedge fund industry’s total asset base, and by paying attention to their best stock picks, Insider Monkey has found various investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
We’re going to take a glance at the recent hedge fund action regarding American Software, Inc. (NASDAQ:AMSWA).
What have hedge funds been doing with American Software, Inc. (NASDAQ:AMSWA)?
At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AMSWA over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Jim Simons’s Renaissance Technologies has the most valuable position in American Software, Inc. (NASDAQ:AMSWA), worth close to $24.4 million, corresponding to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is C. Jonathan Gattman of Cloverdale Capital Management, with a $8.3 million position; the fund has 4.6% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain Chuck Royce’s Royce & Associates, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Overdeck and David Siegel’s Two Sigma Advisors.
As aggregate interest increased, key money managers were breaking ground themselves. Cloverdale Capital Management, managed by C. Jonathan Gattman, initiated the most outsized position in American Software, Inc. (NASDAQ:AMSWA). Cloverdale Capital Management had $8.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $1.1 million investment in the stock during the quarter. The only other fund with a new position in the stock is Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as American Software, Inc. (NASDAQ:AMSWA) but similarly valued. We will take a look at Sierra Bancorp (NASDAQ:BSRR), Ring Energy Inc (NYSE:REI), Beazer Homes USA, Inc. (NYSE:BZH), and MannKind Corporation (NASDAQ:MNKD). All of these stocks’ market caps are closest to AMSWA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BSRR | 6 | 15012 | -1 |
| REI | 13 | 32879 | 5 |
| BZH | 9 | 28100 | -4 |
| MNKD | 7 | 16220 | -1 |
| Average | 8.75 | 23053 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $36 million in AMSWA’s case. Ring Energy Inc (NYSE:REI) is the most popular stock in this table. On the other hand Sierra Bancorp (NASDAQ:BSRR) is the least popular one with only 6 bullish hedge fund positions. American Software, Inc. (NASDAQ:AMSWA) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on AMSWA as the stock returned 22.4% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
