The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards EPAM Systems Inc (NYSE:EPAM).
Is EPAM a good stock to buy? Prominent investors were becoming hopeful. The number of bullish hedge fund positions rose by 5 recently. EPAM Systems Inc (NYSE:EPAM) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EPAM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 28 hedge funds in our database with EPAM holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Richard Driehaus of Driehaus Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 let’s take a look at the recent hedge fund action regarding EPAM Systems Inc (NYSE:EPAM).
Do Hedge Funds Think EPAM Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards EPAM over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GQG Partners was the largest shareholder of EPAM Systems Inc (NYSE:EPAM), with a stake worth $293.1 million reported as of the end of September. Trailing GQG Partners was Citadel Investment Group, which amassed a stake valued at $48.1 million. Hosking Partners, Marshall Wace LLP, and Driehaus Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Brasada Capital Management allocated the biggest weight to EPAM Systems Inc (NYSE:EPAM), around 4.53% of its 13F portfolio. Axel Capital Management is also relatively very bullish on the stock, setting aside 2.77 percent of its 13F equity portfolio to EPAM.
Consequently, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the most valuable position in EPAM Systems Inc (NYSE:EPAM). Citadel Investment Group had $48.1 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $11.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Jinghua Yan’s TwinBeech Capital, and Qing Li’s Sciencast Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as EPAM Systems Inc (NYSE:EPAM) but similarly valued. These stocks are Maxim Integrated Products Inc. (NASDAQ:MXIM), Akamai Technologies, Inc. (NASDAQ:AKAM), The Cooper Companies, Inc. (NYSE:COO), Vulcan Materials Company (NYSE:VMC), Palantir Technologies Inc. (NYSE:PLTR), Rollins, Inc. (NYSE:ROL), and Discover Financial Services (NYSE:DFS). All of these stocks’ market caps are closest to EPAM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MXIM | 52 | 1964354 | 19 |
| AKAM | 40 | 441271 | 0 |
| COO | 30 | 1218371 | -4 |
| VMC | 42 | 1331465 | -9 |
| PLTR | 31 | 643387 | 31 |
| ROL | 29 | 673189 | 0 |
| DFS | 47 | 1120616 | 3 |
| Average | 38.7 | 1056093 | 5.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.7 hedge funds with bullish positions and the average amount invested in these stocks was $1056 million. That figure was $575 million in EPAM’s case. Maxim Integrated Products Inc. (NASDAQ:MXIM) is the most popular stock in this table. On the other hand Rollins, Inc. (NYSE:ROL) is the least popular one with only 29 bullish hedge fund positions. EPAM Systems Inc (NYSE:EPAM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EPAM is 48.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and surpassed the market again by 16.4 percentage points. Unfortunately EPAM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EPAM investors were disappointed as the stock returned 7.2% since the end of September (through 12/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Epam Systems Inc. (NYSE:EPAM)
Follow Epam Systems Inc. (NYSE:EPAM)
Disclosure: None. This article was originally published at Insider Monkey.
