We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. That's a big deal.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
ePlus Inc. (NASDAQ:PLUS) has seen an increase in activity from the world's largest hedge funds of late. PLUS was in 12 hedge funds' portfolios at the end of June. There were 9 hedge funds in our database with PLUS positions at the end of the previous quarter. Our calculations also showed that PLUS isn't among the 30 most popular stocks among hedge funds (see the video below). 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 market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a gander at the latest hedge fund action regarding ePlus Inc. (NASDAQ:PLUS).
How are hedge funds trading ePlus Inc. (NASDAQ:PLUS)?
At the end of the second quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PLUS over the last 16 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in ePlus Inc. (NASDAQ:PLUS). AQR Capital Management has a $7.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $5.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions contain D. E. Shaw's D E Shaw, Ken Griffin's Citadel Investment Group and Renaissance Technologies.
As industrywide interest jumped, some big names have jumped into ePlus Inc. (NASDAQ:PLUS) headfirst. Millennium Management, managed by Israel Englander, assembled the largest position in ePlus Inc. (NASDAQ:PLUS). Millennium Management had $5.5 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $0.6 million position during the quarter. The following funds were also among the new PLUS investors: Benjamin A. Smith's Laurion Capital Management, Paul Marshall and Ian Wace's Marshall Wace LLP, and Mike Vranos's Ellington.
Let's check out hedge fund activity in other stocks similar to ePlus Inc. (NASDAQ:PLUS). We will take a look at Global Brass and Copper Holdings Inc (NYSE:BRSS), Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), Benchmark Electronics, Inc. (NYSE:BHE), and Sturm, Ruger & Company, Inc. (NYSE:RGR). This group of stocks' market caps match PLUS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRSS,17,228771,1 SPPI,9,42962,-4 BHE,12,41025,-7 RGR,13,110819,-4 Average,12.75,105894,-3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $28 million in PLUS's case. Global Brass and Copper Holdings Inc (NYSE:BRSS) is the most popular stock in this table. On the other hand Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) is the least popular one with only 9 bullish hedge fund positions. ePlus Inc. (NASDAQ:PLUS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on PLUS as the stock returned 10.4% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.