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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded ANSYS, Inc. (NASDAQ:ANSS) based on those filings.
Is ANSYS, Inc. (NASDAQ:ANSS) undervalued? The best stock pickers are taking a pessimistic view. The number of long hedge fund positions fell by 2 in recent months. Our calculations also showed that ANSS 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.
To the average investor there are dozens of methods stock traders have at their disposal to value publicly traded companies. A pair of the most innovative methods are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outclass the S&P 500 by a very impressive amount (see the details here).
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Cliff Asness of AQR Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's review the recent hedge fund action regarding ANSYS, Inc. (NASDAQ:ANSS).
What does smart money think about ANSYS, Inc. (NASDAQ:ANSS)?
At the end of the first quarter, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in ANSS a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Select Equity Group, managed by Robert Joseph Caruso, holds the most valuable position in ANSYS, Inc. (NASDAQ:ANSS). Select Equity Group has a $206.2 million position in the stock, comprising 1.4% of its 13F portfolio. On Select Equity Group's heels is Ako Capital, managed by Nicolai Tangen, which holds a $188.5 million position; the fund has 4% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish include Panayotis Takis Sparaggis's Alkeon Capital Management, Charles Akre's Akre Capital Management and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position Crestwood Capital Management allocated the biggest weight to ANSYS, Inc. (NASDAQ:ANSS), around 7.22% of its 13F portfolio. Intermede Investment Partners is also relatively very bullish on the stock, designating 4.4 percent of its 13F equity portfolio to ANSS.
Because ANSYS, Inc. (NASDAQ:ANSS) has faced bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there is a sect of hedge funds that slashed their entire stakes in the first quarter. Intriguingly, Brad Dunkley and Blair Levinsky's Waratah Capital Advisors dumped the largest position of the 750 funds watched by Insider Monkey, totaling an estimated $19.9 million in stock. Israel Englander's fund, Millennium Management, also sold off its stock, about $9.8 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds in the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as ANSYS, Inc. (NASDAQ:ANSS) but similarly valued. These stocks are KKR & Co Inc. (NYSE:KKR), Edison International (NYSE:EIX), Seattle Genetics, Inc. (NASDAQ:SGEN), and AutoZone, Inc. (NYSE:AZO). This group of stocks' market values match ANSS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KKR,48,2694120,-8 EIX,29,1046389,-5 SGEN,27,6153689,-9 AZO,45,1355325,5 Average,37.25,2812381,-4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.25 hedge funds with bullish positions and the average amount invested in these stocks was $2812 million. That figure was $1060 million in ANSS's case. KKR & Co Inc. (NYSE:KKR) is the most popular stock in this table. On the other hand Seattle Genetics, Inc. (NASDAQ:SGEN) is the least popular one with only 27 bullish hedge fund positions. ANSYS, Inc. (NASDAQ:ANSS) is not the least popular stock in this group but hedge fund interest is still below average. 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 gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on ANSS as the stock returned 21.7% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.