Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Aspen Technology, Inc. (NASDAQ:AZPN) from the perspective of those elite funds.
Aspen Technology, Inc. (NASDAQ:AZPN) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. AZPN was in 28 hedge funds’ portfolios at the end of the third quarter of 2018. There were 25 hedge funds in our database with AZPN positions at the end of the previous quarter. Our calculations also showed that azpn isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a gander at the fresh hedge fund action encompassing Aspen Technology, Inc. (NASDAQ:AZPN).
How are hedge funds trading Aspen Technology, Inc. (NASDAQ:AZPN)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards AZPN over the last 13 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Aspen Technology, Inc. (NASDAQ:AZPN), with a stake worth $455.9 million reported as of the end of September. Trailing Renaissance Technologies was Fisher Asset Management, which amassed a stake valued at $209.6 million. Alkeon Capital Management, Two Creeks Capital Management, and Marshall Wace LLP were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, some big names have jumped into Aspen Technology, Inc. (NASDAQ:AZPN) headfirst. Select Equity Group, managed by Robert Joseph Caruso, assembled the most outsized position in Aspen Technology, Inc. (NASDAQ:AZPN). Select Equity Group had $48 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $1.2 million position during the quarter. The following funds were also among the new AZPN investors: Matthew Tewksbury’s Stevens Capital Management, Guy Shahar’s DSAM Partners, and David Andre and Astro Teller’s Cerebellum Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Aspen Technology, Inc. (NASDAQ:AZPN) but similarly valued. These stocks are Nordson Corporation (NASDAQ:NDSN), Public Joint-Stock Company Mobile TeleSystems (NYSE:MBT), KAR Auction Services Inc (NYSE:KAR), and Agnico Eagle Mines Limited (NYSE:AEM). This group of stocks’ market valuations resemble AZPN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NDSN | 16 | 54837 | 1 |
| MBT | 11 | 253236 | -3 |
| KAR | 28 | 757789 | -1 |
| AEM | 15 | 204024 | -3 |
| Average | 17.5 | 317472 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $317 million. That figure was $1.20 billion in AZPN’s case. KAR Auction Services Inc (NYSE:KAR) is the most popular stock in this table. On the other hand Mobile TeleSystems OJSC (NYSE:MBT) is the least popular one with only 11 bullish hedge fund positions. Aspen Technology, Inc. (NASDAQ:AZPN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard KAR might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
