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 SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).
SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) was in 57 hedge funds' portfolios at the end of the first quarter of 2020. SSNC has experienced a decrease in activity from the world's largest hedge funds lately. There were 59 hedge funds in our database with SSNC positions at the end of the previous quarter. Our calculations also showed that SSNC 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_364853" align="aligncenter" width="397"] William Von Mueffling of Cantillon Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to check out the recent hedge fund action regarding SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).
How have hedgies been trading SS&C Technologies Holdings, Inc. (NASDAQ:SSNC)?
At the end of the first quarter, a total of 57 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the previous quarter. By comparison, 37 hedge funds held shares or bullish call options in SSNC a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), with a stake worth $323.8 million reported as of the end of September. Trailing Select Equity Group was Cantillon Capital Management, which amassed a stake valued at $181 million. Cat Rock Capital, Alkeon Capital Management, 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 Cat Rock Capital allocated the biggest weight to SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), around 20.05% of its 13F portfolio. General Equity Partners is also relatively very bullish on the stock, designating 11.63 percent of its 13F equity portfolio to SSNC.
Seeing as SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) has witnessed a decline in interest from hedge fund managers, logic holds that there were a few money managers that decided to sell off their full holdings by the end of the third quarter. Interestingly, Phill Gross and Robert Atchinson's Adage Capital Management sold off the biggest investment of all the hedgies followed by Insider Monkey, valued at about $24.6 million in stock, and Mike Ogborne's Ogborne Capital was right behind this move, as the fund sold off about $8.9 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) but similarly valued. We will take a look at Shinhan Financial Group Co., Ltd. (NYSE:SHG), Discover Financial Services (NYSE:DFS), International Flavors & Fragrances Inc (NYSE:IFF), and Broadridge Financial Solutions, Inc. (NYSE:BR). 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 SHG,5,8469,2 DFS,40,466951,1 IFF,28,163049,0 BR,29,307241,-6 Average,25.5,236428,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $236 million. That figure was $1732 million in SSNC's case. Discover Financial Services (NYSE:DFS) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is more popular among hedge funds. 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 returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on SSNC as the stock returned 27.5% so far in Q2 (through May 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.