Insider Monkey has processed numerous 13F filings of hedge funds and successful investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find write-ups about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Q2 Holdings Inc (NYSE:QTWO) based on that data.
Q2 Holdings Inc (NYSE:QTWO) was in 15 hedge funds' portfolios at the end of the first quarter of 2019. QTWO has seen an increase in activity from the world's largest hedge funds recently. There were 12 hedge funds in our database with QTWO holdings at the end of the previous quarter. Our calculations also showed that QTWO isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_30576" align="aligncenter" width="501"] Glenn Russell Dubin of Highbridge Capital[/caption]
Let's go over the latest hedge fund action surrounding Q2 Holdings Inc (NYSE:QTWO).
Hedge fund activity in Q2 Holdings Inc (NYSE:QTWO)
Heading into the second quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in QTWO a year ago. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Columbus Circle Investors, managed by Principal Global Investors, holds the most valuable position in Q2 Holdings Inc (NYSE:QTWO). Columbus Circle Investors has a $25.6 million position in the stock, comprising 0.7% of its 13F portfolio. Coming in second is Tremblant Capital, managed by Brett Barakett, which holds a $22.8 million position; 1.3% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish consist of Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Ken Griffin's Citadel Investment Group and Israel Englander's Millennium Management.
As one would reasonably expect, specific money managers have jumped into Q2 Holdings Inc (NYSE:QTWO) headfirst. BlueCrest Capital Mgmt., managed by Michael Platt and William Reeves, initiated the most outsized position in Q2 Holdings Inc (NYSE:QTWO). BlueCrest Capital Mgmt. had $26.7 million invested in the company at the end of the quarter. Glenn Russell Dubin's Highbridge Capital Management also initiated a $26.2 million position during the quarter. The other funds with brand new QTWO positions are George Soros's Soros Fund Management, Noam Gottesman's GLG Partners, and Panayotis Takis Sparaggis's Alkeon Capital Management.
Let's also examine hedge fund activity in other stocks similar to Q2 Holdings Inc (NYSE:QTWO). These stocks are Red Rock Resorts, Inc. (NASDAQ:RRR), Corporate Office Properties Trust (NYSE:OFC), Louisiana-Pacific Corporation (NYSE:LPX), and Tenable Holdings, Inc. (NASDAQ:TENB). This group of stocks' market valuations are similar to QTWO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RRR,17,377954,0 OFC,12,156974,-11 LPX,28,461781,-3 TENB,20,153935,5 Average,19.25,287661,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $288 million. That figure was $67 million in QTWO's case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand Corporate Office Properties Trust (NYSE:OFC) is the least popular one with only 12 bullish hedge fund positions. Q2 Holdings Inc (NYSE:QTWO) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on QTWO as the stock returned 13.1% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.