As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the third quarter. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Asure Software Inc (NASDAQ:ASUR).
Asure Software Inc (NASDAQ:ASUR) has seen a decrease in enthusiasm from smart money recently. ASUR was in 5 hedge funds' portfolios at the end of the third quarter of 2019. There were 7 hedge funds in our database with ASUR positions at the end of the previous quarter. Our calculations also showed that ASUR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to review the fresh hedge fund action surrounding Asure Software Inc (NASDAQ:ASUR).
Hedge fund activity in Asure Software Inc (NASDAQ:ASUR)
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in ASUR a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in Asure Software Inc (NASDAQ:ASUR). Royce & Associates has a $5.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Skylands Capital, managed by Charles Paquelet, which holds a $2.4 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include David Harding's Winton Capital Management, Paul Marshall and Ian Wace's Marshall Wace and Frederick DiSanto's Ancora Advisors. In terms of the portfolio weights assigned to each position Skylands Capital allocated the biggest weight to Asure Software Inc (NASDAQ:ASUR), around 0.35% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to ASUR.
Seeing as Asure Software Inc (NASDAQ:ASUR) has witnessed falling interest from the smart money, it's safe to say that there was a specific group of money managers that elected to cut their full holdings in the third quarter. It's worth mentioning that Anand Parekh's Alyeska Investment Group dropped the biggest stake of the 750 funds monitored by Insider Monkey, comprising an estimated $1.7 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund said goodbye to about $0.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let's now review hedge fund activity in other stocks similar to Asure Software Inc (NASDAQ:ASUR). These stocks are Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA), Potbelly Corporation (NASDAQ:PBPB), Second Sight Medical Products Inc (NASDAQ:EYES), and Sachem Capital Corp. (NYSE:SACH). This group of stocks' market valuations resemble ASUR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IEA,7,7296,0 PBPB,9,20532,-2 EYES,1,21,-1 SACH,3,2541,1 Average,5,7598,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $9 million in ASUR's case. Potbelly Corporation (NASDAQ:PBPB) is the most popular stock in this table. On the other hand Second Sight Medical Products Inc (NASDAQ:EYES) is the least popular one with only 1 bullish hedge fund positions. Asure Software Inc (NASDAQ:ASUR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on ASUR as the stock returned 22.2% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.