The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Endava plc (NYSE:DAVA).
Is Endava plc (NYSE:DAVA) the right investment to pursue these days? Investors who are in the know are becoming hopeful. The number of bullish hedge fund positions increased by 2 recently. Our calculations also showed that DAVA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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 58 percentage points since March 2017 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_221556" align="aligncenter" width="392"] Richard Driehaus of Driehaus Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a gander at the new hedge fund action surrounding Endava plc (NYSE:DAVA).
Hedge fund activity in Endava plc (NYSE:DAVA)
At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from the fourth quarter of 2019. By comparison, 6 hedge funds held shares or bullish call options in DAVA a year ago. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Endava plc (NYSE:DAVA) was held by Driehaus Capital, which reported holding $32.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $11.8 million position. Other investors bullish on the company included Adage Capital Management, Citadel Investment Group, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Driehaus Capital allocated the biggest weight to Endava plc (NYSE:DAVA), around 1.09% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, dishing out 0.07 percent of its 13F equity portfolio to DAVA.
Consequently, key money managers have jumped into Endava plc (NYSE:DAVA) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the most valuable position in Endava plc (NYSE:DAVA). Adage Capital Management had $3.5 million invested in the company at the end of the quarter. Sander Gerber's Hudson Bay Capital Management also made a $1.3 million investment in the stock during the quarter. The following funds were also among the new DAVA investors: Greg Eisner's Engineers Gate Manager and Bruce Kovner's Caxton Associates LP.
Let's now take a look at hedge fund activity in other stocks similar to Endava plc (NYSE:DAVA). These stocks are Sanmina Corporation (NASDAQ:SANM), Viela Bio, Inc. (NASDAQ:VIE), Federated Hermes, Inc. (NYSE:FHI), and Louisiana-Pacific Corporation (NYSE:LPX). This group of stocks' market valuations resemble DAVA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SANM,15,146797,-6 VIE,6,291003,0 FHI,28,114653,-1 LPX,26,326375,-3 Average,18.75,219707,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $220 million. That figure was $54 million in DAVA's case. Federated Hermes, Inc. (NYSE:FHI) is the most popular stock in this table. On the other hand Viela Bio, Inc. (NASDAQ:VIE) is the least popular one with only 6 bullish hedge fund positions. Endava plc (NYSE:DAVA) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on DAVA as the stock returned 39.9% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.