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Do Hedge Funds Love SS&C Technologies Holdings, Inc. (SSNC)?

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In this article we will analyze whether SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) has experienced a decrease in hedge fund interest recently. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) was in 49 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 65. There were 54 hedge funds in our database with SSNC positions at the end of the first quarter. Our calculations also showed that SSNC 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.

Seth Klarman of Baupost Group
Seth Klarman of Baupost Group

Seth Klarman of Baupost Group

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. Keeping this in mind let's take a gander at the fresh hedge fund action surrounding SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).

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

At second quarter's end, a total of 49 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the first quarter of 2020. On the other hand, there were a total of 65 hedge funds with a bullish position in SSNC a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Select Equity Group held the most valuable stake in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), which was worth $697 million at the end of the second quarter. On the second spot was Alkeon Capital Management which amassed $374.5 million worth of shares. Cantillon Capital Management, Baupost Group, and Southpoint Capital Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Blacksheep Fund Management allocated the biggest weight to SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), around 11.56% of its 13F portfolio. Sunriver Management is also relatively very bullish on the stock, dishing out 9.9 percent of its 13F equity portfolio to SSNC.

Since SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) has faced falling interest from the aggregate hedge fund industry, we can see that there is a sect of hedgies that decided to sell off their full holdings in the second quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP cut the biggest position of all the hedgies watched by Insider Monkey, totaling close to $65.1 million in stock, and Leon Lowenstein's Lionstone Capital Management was right behind this move, as the fund sold off about $13.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 5 funds in the second quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) but similarly valued. These stocks are Tyler Technologies, Inc. (NYSE:TYL), Catalent Inc (NYSE:CTLT), Pool Corporation (NASDAQ:POOL), PagSeguro Digital Ltd. (NYSE:PAGS), Genuine Parts Company (NYSE:GPC), NetApp Inc. (NASDAQ:NTAP), and Domino's Pizza, Inc. (NYSE:DPZ). This group of stocks' market valuations match SSNC's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TYL,33,731035,5 CTLT,40,870986,11 POOL,40,1025705,-1 PAGS,40,2390344,7 GPC,29,418026,3 NTAP,31,437722,5 DPZ,31,2494688,2 Average,34.9,1195501,4.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.9 hedge funds with bullish positions and the average amount invested in these stocks was $1196 million. That figure was $2569 million in SSNC's case. Catalent Inc (NYSE:CTLT) is the most popular stock in this table. On the other hand Genuine Parts Company (NYSE:GPC) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is more popular among hedge funds. Our overall hedge fund sentiment score for SSNC is 72.6. 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 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Unfortunately SSNC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on SSNC were disappointed as the stock returned -2.3% since the end of the second quarter (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 most of these stocks already outperformed the market since 2019.

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