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Amdocs Limited (DOX): Hedge Funds Are Cashing Out

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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Amdocs Limited (NASDAQ:DOX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Amdocs Limited (NASDAQ:DOX) an excellent investment right now? The best stock pickers were taking a bearish view. The number of bullish hedge fund bets were trimmed by 3 in recent months. Amdocs Limited (NASDAQ:DOX) was in 29 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 32. Our calculations also showed that DOX isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was 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). So you can still find a lot of gems by following hedge funds' moves today.

Billionaire David Siegel's Top 10 Stock Picks
Billionaire David Siegel's Top 10 Stock Picks

David Siegel of Two Sigma Advisors

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. Keeping this in mind we're going to check out the latest hedge fund action encompassing Amdocs Limited (NASDAQ:DOX).

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

At the end of June, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DOX over the last 24 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Amdocs Limited (NASDAQ:DOX) was held by Pzena Investment Management, which reported holding $406.6 million worth of stock at the end of June. It was followed by AQR Capital Management with a $111.4 million position. Other investors bullish on the company included Arrowstreet Capital, Ariel Investments, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Cavalry Asset Management allocated the biggest weight to Amdocs Limited (NASDAQ:DOX), around 1.94% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, designating 1.58 percent of its 13F equity portfolio to DOX.

Due to the fact that Amdocs Limited (NASDAQ:DOX) has experienced bearish sentiment from the smart money, logic holds that there exists a select few funds who sold off their full holdings by the end of the second quarter. Interestingly, Steve Cohen's Point72 Asset Management sold off the largest position of all the hedgies followed by Insider Monkey, valued at about $64 million in stock. Renaissance Technologies, also said goodbye to its stock, about $5.3 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds by the end of the second quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Amdocs Limited (NASDAQ:DOX) but similarly valued. These stocks are NRG Energy Inc (NYSE:NRG), MKS Instruments, Inc. (NASDAQ:MKSI), AGCO Corporation (NYSE:AGCO), Globe Life Inc. (NYSE:GL), Playtika Holding Corp. (NASDAQ:PLTK), Appian Corporation (NASDAQ:APPN), and Sasol Limited (NYSE:SSL). This group of stocks' market values resemble DOX's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NRG,33,1905089,-2 MKSI,26,423293,4 AGCO,38,429223,2 GL,28,795034,-5 PLTK,26,463637,5 APPN,13,879312,-11 SSL,5,63156,-2 Average,24.1,708392,-1.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $708 million. That figure was $797 million in DOX's case. AGCO Corporation (NYSE:AGCO) is the most popular stock in this table. On the other hand Sasol Limited (NYSE:SSL) is the least popular one with only 5 bullish hedge fund positions. Amdocs Limited (NASDAQ:DOX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DOX is 65.6. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on DOX as the stock returned 4.8% since the end of Q2 (through 10/15) 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.