How ePlus Inc. (PLUS) Stacks Up Against Its Peers

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: ePlus Inc. (NASDAQ:PLUS).

Is ePlus Inc. (NASDAQ:PLUS) the right investment to pursue these days? Hedge funds are getting less optimistic. The number of bullish hedge fund bets contracted by 2 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Easterly Government Properties Inc (NYSE:DEA), Enviva Partners LP (NYSE:EVA), and The Gorman-Rupp Company (NYSEAMEX:GRC) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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How have hedgies been trading ePlus Inc. (NASDAQ:PLUS)?

Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 18% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish positions in PLUS over the last 5 quarters, which has trended down, but remained within a narrow range. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in ePlus Inc. (NASDAQ:PLUS), worth close to $11.8 million. Sitting at the No. 2 spot is Parsa Kiai of Steamboat Capital Partners, with a $7.5 million position; the fund has 6.7% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism include Cliff Asness’ AQR Capital Management, Renaissance Technologies, one of the largest hedge funds in the world, and David E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-micro-cap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually dropped their positions entirely. Interestingly, Neil Chriss’ Hutchin Hill Capital dropped the largest investment of all the hedgies watched by Insider Monkey, comprising about $0.7 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also said goodbye to its stock, about $0.3 million worth.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ePlus Inc. (NASDAQ:PLUS) but similarly valued. We will take a look at Easterly Government Properties Inc (NYSE:DEA), Enviva Partners LP (NYSE:EVA), The Gorman-Rupp Company (NYSEAMEX:GRC), and Integer Holdings Corporation (NYSE:ITGR). All of these stocks’ market caps match PLUS’s market cap.

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $28 million in PLUS’s case. Integer Holdings Corporation (NYSE:ITGR) is the most popular stock in this table. On the other hand Enviva Partners LP (NYSE:EVA) is the least popular one with only 2 bullish hedge fund positions. ePlus Inc. (NASDAQ:PLUS) 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 ITGR might be a better candidate to consider taking a long position in.

Disclosure: None