The financial regulations require hedge funds and wealthy investors that exceeded the $100 million 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 March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Paya Holdings Inc. (NASDAQ:PAYA) based on those filings.
Is PAYA a good stock to buy? Paya Holdings Inc. (NASDAQ:PAYA) shareholders have witnessed an increase in support from the world’s most elite money managers recently. Paya Holdings Inc. (NASDAQ:PAYA) was in 29 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 21 hedge funds in our database with PAYA positions at the end of the fourth quarter. Our calculations also showed that PAYA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
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Do Hedge Funds Think PAYA Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PAYA over the last 23 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Point72 Asset Management, managed by Steve Cohen, holds the most valuable position in Paya Holdings Inc. (NASDAQ:PAYA). Point72 Asset Management has a $73.2 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which holds a $33.7 million call position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions consist of Israel Englander’s Millennium Management, Jeffrey Hoffner’s Engle Capital and Anand Parekh’s Alyeska Investment Group. In terms of the portfolio weights assigned to each position Engle Capital allocated the biggest weight to Paya Holdings Inc. (NASDAQ:PAYA), around 4.33% of its 13F portfolio. Pinz Capital is also relatively very bullish on the stock, earmarking 0.95 percent of its 13F equity portfolio to PAYA.
Consequently, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in Paya Holdings Inc. (NASDAQ:PAYA). Balyasny Asset Management had $11.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $10.2 million investment in the stock during the quarter. The following funds were also among the new PAYA investors: Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Paul Tudor Jones’s Tudor Investment Corp, and Frank Fu’s CaaS Capital.
Let’s also examine hedge fund activity in other stocks similar to Paya Holdings Inc. (NASDAQ:PAYA). These stocks are Ocugen, Inc. (NASDAQ:OCGN), AZZ Incorporated (NYSE:AZZ), EVO Payments, Inc. (NASDAQ:EVOP), 908 Devices Inc. (NASDAQ:MASS), Zealand Pharma A/S (NASDAQ:ZEAL), Cango Inc. (NYSE:CANG), and Columbus McKinnon Corporation (NASDAQ:CMCO). This group of stocks’ market caps resemble PAYA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OCGN | 6 | 10091 | 3 |
| AZZ | 13 | 41720 | -2 |
| EVOP | 10 | 34635 | -9 |
| MASS | 14 | 148910 | -8 |
| ZEAL | 1 | 16300 | -2 |
| CANG | 5 | 8559 | 3 |
| CMCO | 13 | 32337 | 0 |
| Average | 8.9 | 41793 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.9 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $249 million in PAYA’s case. 908 Devices Inc. (NASDAQ:MASS) is the most popular stock in this table. On the other hand Zealand Pharma A/S (NASDAQ:ZEAL) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Paya Holdings Inc. (NASDAQ:PAYA) is more popular among hedge funds. Our overall hedge fund sentiment score for PAYA is 90. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Unfortunately PAYA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PAYA were disappointed as the stock returned 4.9% since the end of the first quarter (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Paya Holdings Inc. (NASDAQ:PAYA)
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Disclosure: None. This article was originally published at Insider Monkey.