Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Qualys Inc (NASDAQ:QLYS).
Qualys Inc (NASDAQ:QLYS) investors should pay attention to an increase in hedge fund sentiment of late. Our calculations also showed that QLYS isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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.
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 analyze the key hedge fund action encompassing Qualys Inc (NASDAQ:QLYS).
How have hedgies been trading Qualys Inc (NASDAQ:QLYS)?
At Q2's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards QLYS over the last 16 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, Alkeon Capital Management was the largest shareholder of Qualys Inc (NASDAQ:QLYS), with a stake worth $35.1 million reported as of the end of March. Trailing Alkeon Capital Management was Renaissance Technologies, which amassed a stake valued at $34.7 million. Millennium Management, GLG Partners, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key money managers were leading the bulls' herd. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the biggest position in Qualys Inc (NASDAQ:QLYS). Balyasny Asset Management had $2.1 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also made a $1.6 million investment in the stock during the quarter. The following funds were also among the new QLYS investors: Benjamin A. Smith's Laurion Capital Management, Hoon Kim's Quantinno Capital, and Michael Gelband's ExodusPoint Capital.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Qualys Inc (NASDAQ:QLYS) but similarly valued. These stocks are TCF Financial Corporation (NASDAQ:TCF), National Health Investors Inc (NYSE:NHI), First Hawaiian, Inc. (NASDAQ:FHB), and Companhia Paranaense de Energia - COPEL (NYSE:ELP). This group of stocks' market valuations are similar to QLYS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TCF,20,193696,-2 NHI,13,134792,1 FHB,21,271430,-2 ELP,9,66595,-1 Average,15.75,166628,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $135 million in QLYS's case. First Hawaiian, Inc. (NASDAQ:FHB) is the most popular stock in this table. On the other hand Companhia Paranaense de Energia - COPEL (NYSE:ELP) is the least popular one with only 9 bullish hedge fund positions. Qualys Inc (NASDAQ:QLYS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately QLYS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on QLYS were disappointed as the stock returned -13.2% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.