Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published this article and predicted that US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).
Is SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) the right pick for your portfolio? Investors who are in the know are in a bullish mood. The number of bullish hedge fund bets moved up by 13 lately. Our calculations also showed that SSNC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ricky Sandler of Eminence Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Now we’re going to review the new hedge fund action regarding SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).
What have hedge funds been doing with SS&C Technologies Holdings, Inc. (NASDAQ:SSNC)?
At Q4’s end, a total of 59 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SSNC over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Cantillon Capital Management held the most valuable stake in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), which was worth $254 million at the end of the third quarter. On the second spot was Alkeon Capital Management which amassed $213 million worth of shares. Select Equity Group, Southpoint Capital Advisors, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Harbor Spring Capital allocated the biggest weight to SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), around 11.15% of its 13F portfolio. General Equity Partners is also relatively very bullish on the stock, setting aside 8.91 percent of its 13F equity portfolio to SSNC.
Now, some big names have jumped into SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) headfirst. Eminence Capital, managed by Ricky Sandler, established the largest position in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC). Eminence Capital had $102.7 million invested in the company at the end of the quarter. James Parsons’s Junto Capital Management also made a $52.6 million investment in the stock during the quarter. The following funds were also among the new SSNC investors: Dmitry Balyasny’s Balyasny Asset Management, Renaissance Technologies, and Ben Gordon’s Blue Grotto Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) but similarly valued. These stocks are Paycom Software Inc (NYSE:PAYC), Genuine Parts Company (NYSE:GPC), iQIYI, Inc. (NASDAQ:IQ), and The Liberty SiriusXM Group (NASDAQ:LSXMA). This group of stocks’ market valuations are similar to SSNC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PAYC | 27 | 385882 | -6 |
| GPC | 21 | 271270 | 0 |
| IQ | 18 | 1133592 | -5 |
| LSXMA | 50 | 1786071 | 9 |
| Average | 29 | 894204 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $894 million. That figure was $1996 million in SSNC’s case. The Liberty SiriusXM Group (NASDAQ:LSXMA) is the most popular stock in this table. On the other hand iQIYI, Inc. (NASDAQ:IQ) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 12.9% in 2020 through March 9th and still beat the market by 1.9 percentage points. Unfortunately SSNC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SSNC were disappointed as the stock returned -22% during the first two months of 2020 (through March 9th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
