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 752 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 September 30th. In this article we look at what those investors think of EPAM Systems Inc (NYSE:EPAM).
EPAM Systems Inc (NYSE:EPAM) was in 24 hedge funds' portfolios at the end of September. EPAM investors should be aware of an increase in hedge fund sentiment in recent months. There were 23 hedge funds in our database with EPAM positions at the end of the previous quarter. Our calculations also showed that EPAM 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.
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 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_746893" align="aligncenter" width="473"] Paul Marshall of Marshall Wace[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a peek at the latest hedge fund action encompassing EPAM Systems Inc (NYSE:EPAM).
How are hedge funds trading EPAM Systems Inc (NYSE:EPAM)?
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards EPAM over the last 17 quarters. 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, Paul Marshall and Ian Wace's Marshall Wace has the largest position in EPAM Systems Inc (NYSE:EPAM), worth close to $113.4 million, amounting to 0.9% of its total 13F portfolio. The second most bullish fund manager is GQG Partners, managed by Rajiv Jain, which holds a $73.9 million position; 0.8% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism encompass Cliff Asness's AQR Capital Management, Phill Gross and Robert Atchinson's Adage Capital Management and Louis Navellier's Navellier & Associates. In terms of the portfolio weights assigned to each position Atika Capital allocated the biggest weight to EPAM Systems Inc (NYSE:EPAM), around 1.15% of its portfolio. Navellier & Associates is also relatively very bullish on the stock, designating 0.96 percent of its 13F equity portfolio to EPAM.
Consequently, key hedge funds have jumped into EPAM Systems Inc (NYSE:EPAM) headfirst. GQG Partners, managed by Rajiv Jain, created the biggest position in EPAM Systems Inc (NYSE:EPAM). GQG Partners had $73.9 million invested in the company at the end of the quarter. David E. Shaw's D E Shaw also made a $3.3 million investment in the stock during the quarter. The following funds were also among the new EPAM investors: Perella Weinberg Partners, Matthew Hulsizer's PEAK6 Capital Management, and Robert B. Gillam's McKinley Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as EPAM Systems Inc (NYSE:EPAM) but similarly valued. These stocks are Carvana Co. (NYSE:CVNA), Booz Allen Hamilton Holding Corporation (NYSE:BAH), Elanco Animal Health Incorporated (NYSE:ELAN), and Bio-Rad Laboratories, Inc. (NYSE:BIO). This group of stocks' market valuations resemble EPAM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVNA,48,2000888,3 BAH,33,469671,2 ELAN,24,359109,-3 BIO,39,1091143,3 Average,36,980203,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $980 million. That figure was $286 million in EPAM's case. Carvana Co. (NYSE:CVNA) is the most popular stock in this table. On the other hand Elanco Animal Health Incorporated (NYSE:ELAN) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks EPAM Systems Inc (NYSE:EPAM) is even less popular than ELAN. Hedge funds clearly dropped the ball on EPAM as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 EPAM as the stock returned 16.2% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.