Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds. In this article we are going to take a look at smart money sentiment towards SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).
Is SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) a great investment right now? Hedge funds are getting more optimistic. The number of bullish hedge fund bets improved by 4 lately. Our calculations also showed that SSNC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
In the eyes of most shareholders, hedge funds are assumed to be slow, outdated investment vehicles of years past. While there are more than 8000 funds in operation today, Our experts hone in on the crème de la crème of this group, about 750 funds. It is estimated that this group of investors watch over bulk of the hedge fund industry’s total capital, and by keeping an eye on their first-class stock picks, Insider Monkey has figured out a number of investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Larry Robbins of Glenview Capital
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to take a gander at the fresh hedge fund action surrounding SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).
How have hedgies been trading 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 held long positions in this stock, a change of 10% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in SSNC over the last 17 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) was held by Cantillon Capital Management, which reported holding $218.5 million worth of stock at the end of September. It was followed by Select Equity Group with a $181.5 million position. Other investors bullish on the company included Alkeon Capital Management, Southpoint Capital Advisors, and Harbor Spring Capital. 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 13F portfolio. Harbor Spring Capital is also relatively very bullish on the stock, designating 12.15 percent of its 13F equity portfolio to SSNC.
Consequently, specific money managers have been driving this bullishness. Sunriver Management, managed by Will Cook, initiated the most outsized 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 made a $17.3 million investment in the stock during the quarter. The following funds were also among the new SSNC investors: Larry Robbins’s Glenview Capital, George Baxter’s Sabrepoint Capital, and William Hyatt’s Hudson Way Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to SS&C Technologies Holdings, Inc. (NASDAQ:SSNC). We will take a look at WellCare Health Plans, Inc. (NYSE:WCG), Centrais Eletricas Brasileiras SA – Eletrobras (NYSE:EBR), Ally Financial Inc (NYSE:ALLY), and Icahn Enterprises LP (NASDAQ:IEP). This group of stocks’ market values are similar to SSNC’s market value.
| 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 SA – 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 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on SSNC, though not to the same extent, as the stock returned 36.6% during 2019 (as of 12/23) and outperformed the market as well.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
