The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Net 1 UEPS Technologies Inc (NASDAQ:UEPS) based on those filings.
Net 1 UEPS Technologies Inc (NASDAQ:UEPS) shareholders have witnessed an increase in hedge fund interest lately. Our calculations also showed that UEPS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to take a gander at the new hedge fund action encompassing Net 1 UEPS Technologies Inc (NASDAQ:UEPS).
What does smart money think about Net 1 UEPS Technologies Inc (NASDAQ:UEPS)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UEPS over the last 17 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, International Value Advisers was the largest shareholder of Net 1 UEPS Technologies Inc (NASDAQ:UEPS), with a stake worth $26.5 million reported as of the end of September. Trailing International Value Advisers was Prescott Group Capital Management, which amassed a stake valued at $15.7 million. Rubric Capital Management, Newtyn Management, and D E Shaw 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 Prescott Group Capital Management allocated the biggest weight to Net 1 UEPS Technologies Inc (NASDAQ:UEPS), around 4.84% of its 13F portfolio. International Value Advisers is also relatively very bullish on the stock, designating 0.98 percent of its 13F equity portfolio to UEPS.
As aggregate interest increased, key money managers have been driving this bullishness. Winton Capital Management, managed by David Harding, established the biggest position in Net 1 UEPS Technologies Inc (NASDAQ:UEPS). Winton Capital Management had $0.8 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Net 1 UEPS Technologies Inc (NASDAQ:UEPS) but similarly valued. These stocks are MDC Partners Inc. (NASDAQ:MDCA), Osmotica Pharmaceuticals plc (NASDAQ:OSMT), Culp, Inc. (NYSE:CULP), and PICO Holdings Inc (NASDAQ:PICO). All of these stocks’ market caps resemble UEPS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MDCA | 13 | 39751 | -2 |
| OSMT | 3 | 950 | -3 |
| CULP | 5 | 14536 | 0 |
| PICO | 11 | 27759 | 1 |
| Average | 8 | 20749 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $69 million in UEPS’s case. MDC Partners Inc. (NASDAQ:MDCA) is the most popular stock in this table. On the other hand Osmotica Pharmaceuticals plc (NASDAQ:OSMT) is the least popular one with only 3 bullish hedge fund positions. Net 1 UEPS Technologies Inc (NASDAQ:UEPS) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately UEPS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on UEPS were disappointed as the stock returned -2% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
