A market surge in the first quarter, spurred by easing global macroeconomic concerns and Powell's pivot ended up having a positive impact on the markets and many hedge funds as a result. The stocks of smaller companies which were especially hard hit during the fourth quarter slightly outperformed the market during the first quarter. Unfortunately, Trump is unpredictable and volatility returned in the second quarter and smaller-cap stocks went back to selling off. We finished compiling the latest 13F filings to get an idea about what hedge funds are thinking about the overall market as well as individual stocks. In this article we will study the hedge fund sentiment to see how those concerns affected their ownership of Computer Programs & Systems, Inc. (NASDAQ:CPSI) during the quarter.
Computer Programs & Systems, Inc. (NASDAQ:CPSI) has experienced an increase in hedge fund sentiment in recent months. CPSI was in 18 hedge funds' portfolios at the end of March. There were 13 hedge funds in our database with CPSI positions at the end of the previous quarter. Our calculations also showed that CPSI isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a glance at the recent hedge fund action surrounding Computer Programs & Systems, Inc. (NASDAQ:CPSI).
How have hedgies been trading Computer Programs & Systems, Inc. (NASDAQ:CPSI)?
Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CPSI over the last 15 quarters. With hedgies' capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Computer Programs & Systems, Inc. (NASDAQ:CPSI) was held by Millennium Management, which reported holding $16 million worth of stock at the end of March. It was followed by D E Shaw with a $6.3 million position. Other investors bullish on the company included Marshall Wace LLP, Arrowstreet Capital, and Citadel Investment Group.
Now, key hedge funds have jumped into Computer Programs & Systems, Inc. (NASDAQ:CPSI) headfirst. Millennium Management, managed by Israel Englander, created the biggest call position in Computer Programs & Systems, Inc. (NASDAQ:CPSI). Millennium Management had $3 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $2.6 million position during the quarter. The following funds were also among the new CPSI investors: Bradley Louis Radoff's Fondren Management, Jim Simons's Renaissance Technologies, and Matthew Hulsizer's PEAK6 Capital Management.
Let's also examine hedge fund activity in other stocks similar to Computer Programs & Systems, Inc. (NASDAQ:CPSI). We will take a look at Kaleido BioSciences, Inc. (NASDAQ:KLDO), OptiNose, Inc. (NASDAQ:OPTN), Daqo New Energy Corp (NYSE:DQ), and Old Line Bancshares, Inc. (MD) (NASDAQ:OLBK). This group of stocks' market caps are similar to CPSI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KLDO,6,17238,6 OPTN,3,6910,-3 DQ,5,9512,-6 OLBK,9,37248,0 Average,5.75,17727,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $46 million in CPSI's case. Old Line Bancshares, Inc. (MD) (NASDAQ:OLBK) is the most popular stock in this table. On the other hand OptiNose, Inc. (NASDAQ:OPTN) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Computer Programs & Systems, Inc. (NASDAQ:CPSI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately CPSI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CPSI were disappointed as the stock returned -9.9% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.