Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Sapiens International Corporation N.V. (NASDAQ:SPNS) to find out whether it was one of their high conviction long-term ideas.
Is Sapiens International Corporation N.V. undervalued? The stock has gained more than 30% since the beginning of the year and the number of bullish hedge fund positions moved up by 4 during the third quarter. In this way, SPNS was in 10 hedge funds’ portfolios at the end of September. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Bryn Mawr Bank Corp. (NASDAQ:BMTC), MYR Group Inc (NASDAQ:MYRG), and Triangle Capital Corporation (NYSE:TCAP) to gather more data points.
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In today’s marketplace there are a multitude of methods stock market investors employ to evaluate publicly traded companies. Two of the most underrated methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outclass their index-focused peers by a solid margin (see the details here).
Now, let’s check out the fresh action encompassing Sapiens International Corporation N.V. (NASDAQ:SPNS).
What have hedge funds been doing with Sapiens International Corporation N.V. (NASDAQ:SPNS)?
At the Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Diker Management, managed by Mark N. Diker, holds the number one position in Sapiens International Corporation N.V. (NASDAQ:SPNS). Diker Management has a $6.7 million position in the stock, comprising 1.5% of its 13F portfolio. Sitting at the No. 2 spot is LMR Partners, led by Ben Levine, Andrew Manuel and Stefan Renold, holding a $6.1 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Remaining peers that hold long positions encompass Jim Simons’ Renaissance Technologies, Richard Driehaus’ Driehaus Capital, and Richard Mashaal’s Rima Senvest Management.
As industrywide interest jumped, some big names have jumped into Sapiens International Corporation N.V. (NASDAQ:SPNS) headfirst. LMR Partners created the most valuable position in Sapiens International Corporation N.V. (NASDAQ:SPNS). Robert B. Gillam’s McKinley Capital Management also made a $2 million investment in the stock during the quarter. The following funds were also among the new SPNS investors: John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management, and Neil Chriss’ Hutchin Hill Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sapiens International Corporation N.V. (NASDAQ:SPNS) but similarly valued. We will take a look at Bryn Mawr Bank Corp. (NASDAQ:BMTC), MYR Group Inc (NASDAQ:MYRG), Triangle Capital Corporation (NYSE:TCAP), and Mercury Systems Inc (NASDAQ:MRCY). 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 |
|---|---|---|---|
| BMTC | 8 | 32216 | -1 |
| MYRG | 14 | 79816 | -2 |
| TCAP | 6 | 7140 | 1 |
| MRCY | 18 | 125643 | 4 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $28 million in SPNS’s case. Mercury Systems Inc (NASDAQ:MRCY) is the most popular stock in this table. On the other hand Triangle Capital Corporation (NYSE:TCAP) is the least popular one with only 6 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MRCY might be a better candidate to consider a long position.
