Hedge funds run by legendary names like Nelson Peltz 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 out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
ACI Worldwide Inc (NASDAQ:ACIW) investors should be aware of a decrease in activity from the world’s largest hedge funds lately. ACIW was in 11 hedge funds’ portfolios at the end of the third quarter of 2016. There were 13 hedge funds in our database with ACIW positions at the end of the previous quarter. At the end of this article we will also compare ACIW to other stocks including Nord Anglia Education Inc (NYSE:NORD), Tenet Healthcare Corp (NYSE:THC), and Pegasystems Inc. (NASDAQ:PEGA) to get a better sense of its popularity.
Follow Aci Worldwide Inc. (NASDAQ:ACIW)
Follow Aci Worldwide Inc. (NASDAQ:ACIW)
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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Keeping this in mind, let’s check out the key action surrounding ACI Worldwide Inc (NASDAQ:ACIW).
What have hedge funds been doing with ACI Worldwide Inc (NASDAQ:ACIW)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ACIW over the last 5 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, P2 Capital Partners, led by Claus Moller, holds the most valuable position in ACI Worldwide Inc (NASDAQ:ACIW). According to regulatory filings, the fund has a $75.1 million position in the stock, comprising 11.8% of its 13F portfolio. Coming in second is Amy Minella of Cardinal Capital, with a $43.5 million position; the fund has 2% of its 13F portfolio invested in the stock. Remaining peers that hold long positions encompass Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and D E Shaw, one of the biggest hedge funds in the world. 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.
Because ACI Worldwide Inc (NASDAQ:ACIW) has faced declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of hedge funds who sold off their entire stakes heading into Q4. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP cut the biggest stake of all the investors followed by Insider Monkey, comprising an estimated $1.2 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dumped its stock, about $0.4 million worth of ACIW shares.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ACI Worldwide Inc (NASDAQ:ACIW) but similarly valued. These stocks are Nord Anglia Education Inc (NYSE:NORD), Tenet Healthcare Corp (NYSE:THC), Pegasystems Inc. (NASDAQ:PEGA), and Inovalon Holdings Inc (NASDAQ:INOV). This group of stocks’ market caps are closest to ACIW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NORD | 7 | 147106 | 1 |
| THC | 39 | 759241 | 0 |
| PEGA | 16 | 223417 | -4 |
| INOV | 4 | 2747 | -2 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $283 million. That figure was $159 million in ACIW’s case. Tenet Healthcare Corp (NYSE:THC) is the most popular stock in this table. On the other hand Inovalon Holdings Inc (NASDAQ:INOV) is the least popular one with only 4 bullish hedge fund positions. ACI Worldwide Inc (NASDAQ:ACIW) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard THC might be a better candidate to consider taking a long position in.
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Disclosure: None
