Is The Ultimate Software Group, Inc. (NASDAQ:ULTI) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Is The Ultimate Software Group, Inc. (NASDAQ:ULTI) undervalued? The best stock pickers are becoming more confident. The number of long hedge fund investments grew by 3 recently. ULTI was in 18 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with ULTI holdings at the end of the previous quarter. At the end of this article we will also compare ULTI to other stocks including Apollo Global Management LLC (NYSE:APO), FMC Technologies, Inc. (NYSE:FTI), and Tyler Technologies, Inc. (NYSE:TYL) to get a better sense of its popularity.
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How are hedge funds trading The Ultimate Software Group, Inc. (NASDAQ:ULTI)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a rise of 20% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in ULTI at the beginning of this year. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the biggest position in The Ultimate Software Group, Inc. (NASDAQ:ULTI), worth close to $74.7 million. On Citadel Investment Group’s heels is Matthew A. Weatherbie of Weatherbie Capital, with a $25.3 million position; 3.2% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism comprise Greg Poole’s Echo Street Capital Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Dennis Leibowitz’s Act II Capital. 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-microcap stocks.
As industrywide interest jumped, some big names have jumped into The Ultimate Software Group, Inc. (NASDAQ:ULTI) headfirst. Echo Street Capital Management established the biggest position in The Ultimate Software Group, Inc. (NASDAQ:ULTI) which had $9.5 million invested in the company at the end of the quarter. Act II Capital also made a $6.8 million investment in the stock during the quarter. The other funds with brand new ULTI positions are Andrew Sandler’s Sandler Capital Management, Ken Griffin’s Citadel Investment Group, and Noam Gottesman’s GLG Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The Ultimate Software Group, Inc. (NASDAQ:ULTI) but similarly valued. We will take a look at Apollo Global Management LLC (NYSE:APO), FMC Technologies, Inc. (NYSE:FTI), Tyler Technologies, Inc. (NYSE:TYL), and Steel Dynamics, Inc. (NASDAQ:STLD). This group of stocks’ market valuations are similar to ULTI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APO | 21 | 272595 | 3 |
| FTI | 42 | 1021252 | 5 |
| TYL | 19 | 245181 | -2 |
| STLD | 33 | 634258 | 2 |
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $543 million. That figure was $155 million in ULTI’s case. FMC Technologies, Inc. (NYSE:FTI) is the most popular stock in this table. On the other hand Tyler Technologies, Inc. (NYSE:TYL) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks The Ultimate Software Group, Inc. (NASDAQ:ULTI) is even less popular than TYL. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
