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In this article you are going to find out whether hedge funds think Qualys Inc (NASDAQ:QLYS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is QLYS a good stock to buy now? Qualys Inc (NASDAQ:QLYS) has seen a decrease in hedge fund interest of late. Qualys Inc (NASDAQ:QLYS) was in 19 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 29. Our calculations also showed that QLYS isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
In today’s marketplace there are tons of methods shareholders use to size up stocks. Some of the most under-the-radar methods are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best investment managers can beat their index-focused peers by a superb amount (see the details here).
Jim Simons founder of Renaissance Technologies
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we're going to go over the new hedge fund action regarding Qualys Inc (NASDAQ:QLYS).
Do Hedge Funds Think QLYS Is A Good Stock To Buy Now?
At Q3's end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -30% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards QLYS over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Qualys Inc (NASDAQ:QLYS), with a stake worth $32.5 million reported as of the end of September. Trailing Renaissance Technologies was GLG Partners, which amassed a stake valued at $25.5 million. Two Sigma Advisors, Arrowstreet Capital, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Portolan Capital Management allocated the biggest weight to Qualys Inc (NASDAQ:QLYS), around 0.94% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, designating 0.31 percent of its 13F equity portfolio to QLYS.
Judging by the fact that Qualys Inc (NASDAQ:QLYS) has faced a decline in interest from the smart money, we can see that there lies a certain "tier" of money managers that slashed their positions entirely by the end of the third quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP said goodbye to the largest stake of the "upper crust" of funds followed by Insider Monkey, totaling close to $3 million in stock, and Chuck Royce's Royce & Associates was right behind this move, as the fund said goodbye to about $2.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 8 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks similar to Qualys Inc (NASDAQ:QLYS). These stocks are Rackspace Technology, Inc. (NASDAQ:RXT), New York Community Bancorp, Inc. (NYSE:NYCB), Relay Therapeutics, Inc. (NASDAQ:RLAY), Penske Automotive Group, Inc. (NYSE:PAG), National General Holdings Corp (NASDAQ:NGHC), ICU Medical, Inc. (NASDAQ:ICUI), and Tenable Holdings, Inc. (NASDAQ:TENB). This group of stocks' market valuations are closest to QLYS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RXT,15,143133,15 NYCB,28,218403,0 RLAY,18,733691,18 PAG,18,107356,-3 NGHC,25,489741,8 ICUI,31,295797,-1 TENB,30,490303,8 Average,23.6,354061,6.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $354 million. That figure was $114 million in QLYS's case. ICU Medical, Inc. (NASDAQ:ICUI) is the most popular stock in this table. On the other hand Rackspace Technology, Inc. (NASDAQ:RXT) is the least popular one with only 15 bullish hedge fund positions. Qualys Inc (NASDAQ:QLYS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for QLYS is 29.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately QLYS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); QLYS investors were disappointed as the stock returned 4.3% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.