It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 13.1% in the first 2.5 months of this year (including dividend payments). Conversely, hedge funds’ top 15 large-cap stock picks generated a return of 19.7% during the same 2.5-month period, with 93% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds' stock picks generate superior risk-adjusted returns. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Bottomline Technologies (de), Inc. (NASDAQ:EPAY).
Bottomline Technologies (de), Inc. (NASDAQ:EPAY) shareholders have witnessed a decrease in activity from the world's largest hedge funds recently. Our calculations also showed that epay isn't among the 30 most popular stocks among hedge funds.
To most stock holders, hedge funds are viewed as underperforming, outdated financial tools of years past. While there are more than 8000 funds with their doors open today, Our experts hone in on the top tier of this club, around 750 funds. Most estimates calculate that this group of people watch over the lion's share of the hedge fund industry's total asset base, and by keeping an eye on their highest performing stock picks, Insider Monkey has found numerous investment strategies that have historically outpaced Mr. Market. Insider Monkey's flagship hedge fund strategy beat the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
[caption id="attachment_735677" align="aligncenter" width="473"] Sander Gerber of Hudson Bay Capital[/caption]
We're going to take a gander at the latest hedge fund action surrounding Bottomline Technologies (de), Inc. (NASDAQ:EPAY).
How have hedgies been trading Bottomline Technologies (de), Inc. (NASDAQ:EPAY)?
At Q4's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EPAY over the last 14 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in Bottomline Technologies (de), Inc. (NASDAQ:EPAY) was held by Fisher Asset Management, which reported holding $19.7 million worth of stock at the end of September. It was followed by Shannon River Fund Management with a $11.6 million position. Other investors bullish on the company included Renaissance Technologies, Hudson Bay Capital Management, and AQR Capital Management.
Seeing as Bottomline Technologies (de), Inc. (NASDAQ:EPAY) has experienced bearish sentiment from hedge fund managers, it's easy to see that there lies a certain "tier" of hedgies who were dropping their full holdings last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital cut the largest position of the 700 funds tracked by Insider Monkey, valued at an estimated $34 million in call options, and Matthew Hulsizer's PEAK6 Capital Management was right behind this move, as the fund sold off about $3.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Bottomline Technologies (de), Inc. (NASDAQ:EPAY). These stocks are Whiting Petroleum Corporation (NYSE:WLL), Tenable Holdings, Inc. (NASDAQ:TENB), II-VI, Inc. (NASDAQ:IIVI), and SailPoint Technologies Holdings, Inc. (NYSE:SAIL). This group of stocks' market caps match EPAY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WLL,33,356034,-6 TENB,15,49207,-4 IIVI,22,139334,9 SAIL,22,167257,5 Average,23,177958,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $178 million. That figure was $75 million in EPAY's case. Whiting Petroleum Corporation (NYSE:WLL) is the most popular stock in this table. On the other hand Tenable Holdings, Inc. (NASDAQ:TENB) is the least popular one with only 15 bullish hedge fund positions. Bottomline Technologies (de), Inc. (NASDAQ:EPAY) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately EPAY wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); EPAY investors were disappointed as the stock returned 0.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.