Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That’s why we pay special attention to hedge fund activity in these stocks.
Upland Software Inc (NASDAQ:UPLD) has experienced an increase in enthusiasm from smart money lately. UPLD was in 28 hedge funds’ portfolios at the end of the first quarter of 2019. There were 25 hedge funds in our database with UPLD positions at the end of the previous quarter. Our calculations also showed that upld isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a look at the recent hedge fund action regarding Upland Software Inc (NASDAQ:UPLD).
How are hedge funds trading Upland Software Inc (NASDAQ:UPLD)?
At the end of the first quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in UPLD 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.
The largest stake in Upland Software Inc (NASDAQ:UPLD) was held by Portolan Capital Management, which reported holding $35.1 million worth of stock at the end of March. It was followed by Dorset Management with a $18.6 million position. Other investors bullish on the company included G2 Investment Partners Management, Ardsley Partners, and Driehaus Capital.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Hudson Bay Capital Management, managed by Sander Gerber, initiated the largest call position in Upland Software Inc (NASDAQ:UPLD). Hudson Bay Capital Management had $5.5 million invested in the company at the end of the quarter. Andrew Bellas’s General Equity Partners also initiated a $4.7 million position during the quarter. The following funds were also among the new UPLD investors: Joseph Mathias’s Concourse Capital Management, Matthew Hulsizer’s PEAK6 Capital Management, and Bruce Kovner’s Caxton Associates LP.
Let’s also examine hedge fund activity in other stocks similar to Upland Software Inc (NASDAQ:UPLD). We will take a look at Interface, Inc. (NASDAQ:TILE), Perficient, Inc. (NASDAQ:PRFT), Kforce Inc. (NASDAQ:KFRC), and National Energy Services Reunited Corp. (NASDAQ:NESR). This group of stocks’ market valuations are similar to UPLD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TILE | 14 | 46564 | -2 |
| PRFT | 16 | 29517 | 2 |
| KFRC | 22 | 79198 | 1 |
| NESR | 8 | 34574 | 4 |
| Average | 15 | 47463 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $170 million in UPLD’s case. Kforce Inc. (NASDAQ:KFRC) is the most popular stock in this table. On the other hand National Energy Services Reunited Corp. (NASDAQ:NESR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Upland Software Inc (NASDAQ:UPLD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on UPLD as the stock returned 13.6% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
