The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Q2 Holdings Inc (NYSE:QTWO) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Q2 Holdings Inc (NYSE:QTWO) the right pick for your portfolio? Money managers were buying. The number of long hedge fund bets rose by 8 lately. Q2 Holdings Inc (NYSE:QTWO) was in 26 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that QTWO isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 21st century investor’s toolkit there are a large number of signals stock traders can use to analyze stocks. A pair of the most under-the-radar signals are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best fund managers can trounce the S&P 500 by a significant margin (see the details here).
Ian Wace of Marshall Wace
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. With all of this in mind let’s take a glance at the latest hedge fund action surrounding Q2 Holdings Inc (NYSE:QTWO).
How have hedgies been trading Q2 Holdings Inc (NYSE:QTWO)?
At second quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 44% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards QTWO over the last 20 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Brett Barakett’s Tremblant Capital has the most valuable position in Q2 Holdings Inc (NYSE:QTWO), worth close to $112.4 million, amounting to 4.7% of its total 13F portfolio. The second most bullish fund manager is Jeffrey Diehl of Adams Street Partners, with a $92.4 million position; the fund has 19.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise Principal Global Investors’s Columbus Circle Investors, Bobby Yazdani and Babak Poushanchi’s Cota Capital and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Adams Street Partners allocated the biggest weight to Q2 Holdings Inc (NYSE:QTWO), around 19.12% of its 13F portfolio. Cota Capital is also relatively very bullish on the stock, setting aside 7.77 percent of its 13F equity portfolio to QTWO.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, established the most valuable position in Q2 Holdings Inc (NYSE:QTWO). Millennium Management had $6 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $3.8 million investment in the stock during the quarter. The following funds were also among the new QTWO investors: Panayotis Takis Sparaggis’s Alkeon Capital Management, Anthony S. Daffer’s Provenire Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Q2 Holdings Inc (NYSE:QTWO) but similarly valued. We will take a look at Science Applications International Corp (NYSE:SAIC), Haemonetics Corporation (NYSE:HAE), MyoKardia, Inc. (NASDAQ:MYOK), TCF Financial Corporation (NASDAQ:TCF), Western Midstream Partners, LP (NYSE:WES), Life Storage, Inc. (NYSE:LSI), and The Descartes Systems Group Inc (NASDAQ:DSGX). This group of stocks’ market valuations match QTWO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SAIC | 35 | 448930 | 1 |
| HAE | 39 | 533278 | 5 |
| MYOK | 45 | 1360886 | 12 |
| TCF | 14 | 85082 | -5 |
| WES | 11 | 79571 | -1 |
| LSI | 19 | 137533 | -3 |
| DSGX | 10 | 196345 | 0 |
| Average | 24.7 | 405946 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $406 million. That figure was $290 million in QTWO’s case. MyoKardia, Inc. (NASDAQ:MYOK) is the most popular stock in this table. On the other hand The Descartes Systems Group Inc (NASDAQ:DSGX) is the least popular one with only 10 bullish hedge fund positions. Q2 Holdings Inc (NYSE:QTWO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for QTWO is 62.9. 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 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 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Hedge funds were also right about betting on QTWO as the stock returned 8.2% during Q3 (through September 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
