Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of NICE Ltd (NASDAQ:NICE) based on that data.
NICE Ltd (NASDAQ:NICE) has seen an increase in activity from the world’s largest hedge funds lately. NICE was in 22 hedge funds’ portfolios at the end of March. There were 19 hedge funds in our database with NICE positions at the end of the previous quarter. Our calculations also showed that NICE 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 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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Robert Moses of RGM Capital
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the key hedge fund action surrounding NICE Ltd (NASDAQ:NICE).
How have hedgies been trading NICE Ltd (NASDAQ:NICE)?
Heading into the second quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in NICE a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in NICE Ltd (NASDAQ:NICE) was held by RGM Capital, which reported holding $110.8 million worth of stock at the end of September. It was followed by SQN Investors with a $83.4 million position. Other investors bullish on the company included Shannon River Fund Management, Arrowstreet Capital, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Blackcrane Capital allocated the biggest weight to NICE Ltd (NASDAQ:NICE), around 8.77% of its 13F portfolio. RGM Capital is also relatively very bullish on the stock, earmarking 8.71 percent of its 13F equity portfolio to NICE.
Now, specific money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized position in NICE Ltd (NASDAQ:NICE). Balyasny Asset Management had $4.4 million invested in the company at the end of the quarter. Thomas Lee’s Lee Capital Management also initiated a $1.6 million position during the quarter. The other funds with brand new NICE positions are Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund, Greg Eisner’s Engineers Gate Manager, and 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 NICE Ltd (NASDAQ:NICE) but similarly valued. These stocks are Gartner Inc (NYSE:IT), Pinterest, Inc. (NYSE:PINS), GDS Holdings Limited (NASDAQ:GDS), and CarMax Inc (NYSE:KMX). This group of stocks’ market caps are similar to NICE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IT | 32 | 973145 | 6 |
| PINS | 38 | 410292 | 1 |
| GDS | 41 | 1618404 | 7 |
| KMX | 37 | 1084332 | -13 |
| Average | 37 | 1021543 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1022 million. That figure was $374 million in NICE’s case. GDS Holdings Limited (NASDAQ:GDS) is the most popular stock in this table. On the other hand Gartner Inc (NYSE:IT) is the least popular one with only 32 bullish hedge fund positions. Compared to these stocks NICE Ltd (NASDAQ:NICE) is even less popular than IT. Hedge funds clearly dropped the ball on NICE as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on NICE as the stock returned 31.3% so far in 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.
