Where Do Hedge Funds Stand On CSG Systems International, Inc. (CSGS)?

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. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider CSG Systems International, Inc. (NASDAQ:CSGS) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Hedge fund interest in CSG Systems International, Inc. (NASDAQ:CSGS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CSGS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). 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 Comstock Resources Inc (NYSE:CRK), Eargo, Inc. (NASDAQ:EAR), and Pitney Bowes Inc. (NYSE:PBI) to gather more data points.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Peter Algert of Algert Global

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to take a glance at the key hedge fund action regarding CSG Systems International, Inc. (NASDAQ:CSGS).

Do Hedge Funds Think CSGS Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CSGS over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Renaissance Technologies has the biggest position in CSG Systems International, Inc. (NASDAQ:CSGS), worth close to $53.6 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Polar Capital, led by Brian Ashford-Russell and Tim Woolley, holding a $20.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism consist of Tim Curro’s Value Holdings LP, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Value Holdings LP allocated the biggest weight to CSG Systems International, Inc. (NASDAQ:CSGS), around 3.51% of its 13F portfolio. Fort Baker Capital Management is also relatively very bullish on the stock, setting aside 1.46 percent of its 13F equity portfolio to CSGS.

Since CSG Systems International, Inc. (NASDAQ:CSGS) has witnessed a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few money managers that decided to sell off their entire stakes heading into Q3. At the top of the heap, Ken Griffin’s Citadel Investment Group dumped the largest investment of all the hedgies tracked by Insider Monkey, totaling close to $9.4 million in stock. Brandon Haley’s fund, Holocene Advisors, also dumped its stock, about $1.7 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks similar to CSG Systems International, Inc. (NASDAQ:CSGS). We will take a look at Comstock Resources Inc (NYSE:CRK), Eargo, Inc. (NASDAQ:EAR), Pitney Bowes Inc. (NYSE:PBI), PMV Pharmaceuticals, Inc. (NASDAQ:PMVP), Materion Corp (NYSE:MTRN), Marcus & Millichap Inc (NYSE:MMI), and NeoGames S.A. (NASDAQ:NGMS). This group of stocks’ market values resemble CSGS’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.4 hedge funds with bullish positions and the average amount invested in these stocks was $193 million. That figure was $143 million in CSGS’s case. Pitney Bowes Inc. (NYSE:PBI) is the most popular stock in this table. On the other hand Marcus & Millichap Inc (NYSE:MMI) is the least popular one with only 11 bullish hedge fund positions. CSG Systems International, Inc. (NASDAQ:CSGS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CSGS is 85. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on CSGS as the stock returned 7.9% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.