Is AZPN Stock A Buy or Sell?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Aspen Technology, Inc. (NASDAQ:AZPN).

Is AZPN stock a buy? Aspen Technology, Inc. (NASDAQ:AZPN) shareholders have witnessed an increase in hedge fund interest in recent months. Aspen Technology, Inc. (NASDAQ:AZPN) was in 29 hedge funds’ portfolios at the end of December. The all time high for this statistic is 37. Our calculations also showed that AZPN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Ken Fisher of Fisher Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to review the key hedge fund action surrounding Aspen Technology, Inc. (NASDAQ:AZPN).

Do Hedge Funds Think AZPN Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. On the other hand, there were a total of 37 hedge funds with a bullish position in AZPN a year ago. 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, BlueSpruce Investments, managed by Tim Hurd and Ed Magnus, holds the largest position in Aspen Technology, Inc. (NASDAQ:AZPN). BlueSpruce Investments has a $507.7 million position in the stock, comprising 10% of its 13F portfolio. The second most bullish fund manager is Panayotis Takis Sparaggis of Alkeon Capital Management, with a $223.1 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining peers with similar optimism comprise Ryan Pedlow’s Two Creeks Capital Management, Ken Fisher’s Fisher Asset Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position BlueSpruce Investments allocated the biggest weight to Aspen Technology, Inc. (NASDAQ:AZPN), around 10% of its 13F portfolio. Two Creeks Capital Management is also relatively very bullish on the stock, setting aside 7.03 percent of its 13F equity portfolio to AZPN.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most outsized position in Aspen Technology, Inc. (NASDAQ:AZPN). Arrowstreet Capital had $2.4 million invested in the company at the end of the quarter. Jinghua Yan’s TwinBeech Capital also initiated a $1.5 million position during the quarter. The following funds were also among the new AZPN investors: Michel Massoud’s Melqart Asset Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Donald Sussman’s Paloma Partners.

Let’s also examine hedge fund activity in other stocks similar to Aspen Technology, Inc. (NASDAQ:AZPN). These stocks are CyrusOne Inc (NASDAQ:CONE), Formula One Group (NASDAQ:FWONA), NiSource Inc. (NYSE:NI), Watsco Inc (NYSE:WSO), IAA, Inc. (NYSE:IAA), BridgeBio Pharma, Inc. (NASDAQ:BBIO), and The Mosaic Company (NYSE:MOS). This group of stocks’ market values are similar to AZPN’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $909 million. That figure was $1176 million in AZPN’s case. The Mosaic Company (NYSE:MOS) is the most popular stock in this table. On the other hand CyrusOne Inc (NASDAQ:CONE) is the least popular one with only 21 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. Our overall hedge fund sentiment score for AZPN is 53.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on AZPN as the stock returned 17.8% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.