At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31. In this article, we will use that wealth of knowledge to determine whether or not Aspen Technology, Inc. (NASDAQ:AZPN) makes for a good investment right now.
Aspen Technology, Inc. (NASDAQ:AZPN) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 25 hedge funds' portfolios at the end of March. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Unum Group (NYSE:UNM), The Middleby Corporation (NASDAQ:MIDD), and Companhia de Saneamento Básico do Estado de São Paulo - SABESP (NYSE:SBS) to gather more data points.
If you'd ask most traders, hedge funds are assumed to be slow, outdated investment vehicles of years past. While there are greater than 8000 funds with their doors open today, We look at the elite of this club, about 750 funds. These hedge fund managers command the majority of the hedge fund industry's total asset base, and by keeping track of their inimitable picks, Insider Monkey has unsheathed several investment strategies that have historically surpassed Mr. Market. Insider Monkey's flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
Let's take a gander at the latest hedge fund action regarding Aspen Technology, Inc. (NASDAQ:AZPN).
Hedge fund activity in Aspen Technology, Inc. (NASDAQ:AZPN)
At Q1's end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards AZPN over the last 15 quarters. So, let's find out 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, Renaissance Technologies, managed by Jim Simons, holds the largest position in Aspen Technology, Inc. (NASDAQ:AZPN). Renaissance Technologies has a $357.5 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Fisher Asset Management, led by Ken Fisher, holding a $153.3 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions consist of Panayotis Takis Sparaggis's Alkeon Capital Management, Ken Griffin's Citadel Investment Group and Ryan Pedlow's Two Creeks Capital Management.
Judging by the fact that Aspen Technology, Inc. (NASDAQ:AZPN) has faced bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there were a few money managers who were dropping their full holdings by the end of the third quarter. Intriguingly, Greg Poole's Echo Street Capital Management said goodbye to the biggest stake of the 700 funds monitored by Insider Monkey, valued at an estimated $7.6 million in call options. D. E. Shaw's fund, D E Shaw, also said goodbye to its call options, about $0.7 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Aspen Technology, Inc. (NASDAQ:AZPN) but similarly valued. We will take a look at Unum Group (NYSE:UNM), The Middleby Corporation (NASDAQ:MIDD), Companhia de Saneamento Básico do Estado de São Paulo - SABESP (NYSE:SBS), and PRA Health Sciences Inc (NASDAQ:PRAH). This group of stocks' market caps are closest to AZPN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UNM,25,373181,0 MIDD,20,656010,3 SBS,16,330259,-1 PRAH,28,411788,3 Average,22.25,442810,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $443 million. That figure was $1109 million in AZPN's case. PRA Health Sciences Inc (NASDAQ:PRAH) is the most popular stock in this table. On the other hand Companhia de Saneamento Básico do Estado de São Paulo - SABESP (NYSE:SBS) is the least popular one with only 16 bullish hedge fund positions. Aspen Technology, Inc. (NASDAQ:AZPN) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on AZPN as the stock returned 11.3% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.