Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).
Is SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) a bargain? The best stock pickers are in an optimistic mood. The number of long hedge fund bets went up by 4 recently. Our calculations also showed that SSNC isn’t among the 30 most popular stocks among hedge funds. SSNC was in 45 hedge funds’ portfolios at the end of September. There were 41 hedge funds in our database with SSNC positions at the end of the previous quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
William Von Mueffling of Cantillon Capital Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to check out the key 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 the end of the third quarter, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SSNC over the last 17 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Cantillon Capital Management was the largest shareholder of SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), with a stake worth $218.5 million reported as of the end of September. Trailing Cantillon Capital Management was Select Equity Group, which amassed a stake valued at $181.5 million. Alkeon Capital Management, Southpoint Capital Advisors, and Harbor Spring Capital 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 General Equity Partners allocated the biggest weight to SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), around 13.35% of its portfolio. Harbor Spring Capital is also relatively very bullish on the stock, dishing out 12.15 percent of its 13F equity portfolio to SSNC.
As one would reasonably expect, key hedge funds have been driving this bullishness. Sunriver Management, managed by Will Cook, assembled the most valuable position in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC). Sunriver Management had $32.6 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace also initiated a $17.3 million position during the quarter. The other funds with brand new SSNC positions are Larry Robbins’s Glenview Capital, George Baxter’s Sabrepoint Capital, and William Hyatt’s Hudson Way Capital Management.
Let’s check out hedge fund activity in other stocks similar to SS&C Technologies Holdings, Inc. (NASDAQ:SSNC). These stocks are WellCare Health Plans, Inc. (NYSE:WCG), Centrais Eletricas Brasileiras S.A. – Eletrobras (NYSE:EBR), Ally Financial Inc (NYSE:ALLY), and Icahn Enterprises LP (NASDAQ:IEP). This group of stocks’ market caps resemble SSNC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WCG | 41 | 1791970 | -5 |
| EBR | 5 | 21001 | -1 |
| ALLY | 51 | 2112182 | 8 |
| IEP | 5 | 12357565 | 0 |
| Average | 25.5 | 4070680 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $4071 million. That figure was $1483 million in SSNC’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand Centrais Eletricas Brasileiras S.A. – Eletrobras (NYSE:EBR) is the least popular one with only 5 bullish hedge fund positions. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) 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 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Hedge funds were also right about betting on SSNC as the stock returned 16.2% during the fourth quarter (through 11/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
