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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards ANSYS, Inc. (NASDAQ:ANSS) to find out whether there were any major changes in hedge funds' views.
Is ANSYS, Inc. (NASDAQ:ANSS) a healthy stock for your portfolio? Investors who are in the know were in a bullish mood. The number of bullish hedge fund bets rose by 13 lately. ANSYS, Inc. (NASDAQ:ANSS) was in 46 hedge funds' portfolios at the end of June. The all time high for this statistic was previously 40. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ANSS isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 33 hedge funds in our database with ANSS positions at the end of the first quarter.
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.
Charles Akre of Akre Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, artificial intelligence is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging AI 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. Now we're going to go over the fresh hedge fund action encompassing ANSYS, Inc. (NASDAQ:ANSS).
Do Hedge Funds Think ANSS Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 39% from one quarter earlier. On the other hand, there were a total of 40 hedge funds with a bullish position in ANSS a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Ian Simm's Impax Asset Management has the most valuable position in ANSYS, Inc. (NASDAQ:ANSS), worth close to $256.3 million, amounting to 1.1% of its total 13F portfolio. On Impax Asset Management's heels is Akre Capital Management, managed by Charles Akre, which holds a $211.6 million position; 1.3% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions encompass Terry Smith's Fundsmith LLP, Panayotis Takis Sparaggis's Alkeon Capital Management and Barry Dargan's Intermede Investment Partners. In terms of the portfolio weights assigned to each position Crestwood Capital Management allocated the biggest weight to ANSYS, Inc. (NASDAQ:ANSS), around 6.72% of its 13F portfolio. Montanaro Asset Management is also relatively very bullish on the stock, dishing out 4.59 percent of its 13F equity portfolio to ANSS.
Consequently, key money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in ANSYS, Inc. (NASDAQ:ANSS). Balyasny Asset Management had $18 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $13.8 million position during the quarter. The following funds were also among the new ANSS investors: Ray Dalio's Bridgewater Associates, Michael Gelband's ExodusPoint Capital, and Donald Sussman's Paloma Partners.
Let's go over hedge fund activity in other stocks similar to ANSYS, Inc. (NASDAQ:ANSS). We will take a look at Fomento Economico Mexicano SAB (NYSE:FMX), SVB Financial Group (NASDAQ:SIVB), Public Service Enterprise Group Incorporated (NYSE:PEG), Sun Life Financial Inc. (NYSE:SLF), Ecopetrol S.A. (NYSE:EC), Nokia Corporation (NYSE:NOK), and Nasdaq, Inc. (NASDAQ:NDAQ). This group of stocks' market caps match ANSS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FMX,13,904303,-2 SIVB,49,1038598,0 PEG,26,393079,2 SLF,11,94573,-6 EC,6,95004,-2 NOK,26,494361,5 NDAQ,23,191757,1 Average,22,458811,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $459 million. That figure was $1459 million in ANSS's case. SVB Financial Group (NASDAQ:SIVB) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 6 bullish hedge fund positions. ANSYS, Inc. (NASDAQ:ANSS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ANSS is 86.5. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately ANSS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ANSS were disappointed as the stock returned -0.7% since the end of June (through 10/1) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.