We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind let’s see whether Sapiens International Corporation N.V. (NASDAQ:SPNS) represents a good buying opportunity at the moment. Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Sapiens International Corporation N.V. (NASDAQ:SPNS) was in 10 hedge funds’ portfolios at the end of December. SPNS investors should be aware of an increase in enthusiasm from smart money in recent months. There were 8 hedge funds in our database with SPNS holdings at the end of the previous quarter. Our calculations also showed that SPNS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Richard Driehaus of Driehaus Capital
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the key hedge fund action surrounding Sapiens International Corporation N.V. (NASDAQ:SPNS).
Hedge fund activity in Sapiens International Corporation N.V. (NASDAQ:SPNS)
At Q4’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 3 hedge funds with a bullish position in SPNS a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Sapiens International Corporation N.V. (NASDAQ:SPNS), which was worth $16.9 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $11.8 million worth of shares. Driehaus Capital, Millennium Management, and Navellier & Associates 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 Navellier & Associates allocated the biggest weight to Sapiens International Corporation N.V. (NASDAQ:SPNS), around 0.43% of its 13F portfolio. Caxton Associates LP is also relatively very bullish on the stock, earmarking 0.1 percent of its 13F equity portfolio to SPNS.
Consequently, key money managers have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, established the largest position in Sapiens International Corporation N.V. (NASDAQ:SPNS). ExodusPoint Capital had $0.4 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $0.3 million position during the quarter.
Let’s go over hedge fund activity in other stocks similar to Sapiens International Corporation N.V. (NASDAQ:SPNS). These stocks are Futu Holdings Limited (NASDAQ:FUTU), B&G Foods, Inc. (NYSE:BGS), Piper Jaffray Companies (NYSE:PJC), and GMS Inc. (NYSE:GMS). This group of stocks’ market values are closest to SPNS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FUTU | 3 | 1257 | 2 |
| BGS | 15 | 73995 | -2 |
| PJC | 11 | 48925 | 1 |
| GMS | 17 | 81148 | -8 |
| Average | 11.5 | 51331 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $41 million in SPNS’s case. GMS Inc. (NYSE:GMS) is the most popular stock in this table. On the other hand Futu Holdings Limited (NASDAQ:FUTU) is the least popular one with only 3 bullish hedge fund positions. Sapiens International Corporation N.V. (NASDAQ:SPNS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but still beat the market by 12.9 percentage points. A small number of hedge funds were also right about betting on SPNS as the stock returned 4.1% during the same time period and outperformed the market by an even larger margin.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
