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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).
Is SSNC a good stock to buy now? SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) shareholders have witnessed a decrease in enthusiasm from smart money recently. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) was in 54 hedge funds' portfolios at the end of September. The all time high for this statistics is 65. There were 65 hedge funds in our database with SSNC holdings at the end of June. Our calculations also showed that SSNC 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 the eyes of most investors, hedge funds are viewed as worthless, old financial vehicles of years past. While there are greater than 8000 funds in operation at the moment, We hone in on the top tier of this club, about 850 funds. These investment experts control the lion's share of all hedge funds' total asset base, and by paying attention to their first-class investments, Insider Monkey has revealed several investment strategies that have historically outrun the S&P 500 index. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Ken Griffin of Citadel Investment Group
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What does smart money think about SS&C Technologies Holdings, Inc. (NASDAQ:SSNC)?
At the end of September, a total of 54 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 46 hedge funds with a bullish position in SSNC a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Select Equity Group was the largest shareholder of SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), with a stake worth $661.6 million reported as of the end of September. Trailing Select Equity Group was Cantillon Capital Management, which amassed a stake valued at $249.6 million. Alkeon Capital Management, Baupost Group, and Southpoint Capital Advisors 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 Blacksheep Fund Management allocated the biggest weight to SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), around 18.77% of its 13F portfolio. Guardian Point Capital is also relatively very bullish on the stock, dishing out 11.6 percent of its 13F equity portfolio to SSNC.
Due to the fact that SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) has experienced a decline in interest from the smart money, it's easy to see that there is a sect of money managers that elected to cut their positions entirely by the end of the third quarter. It's worth mentioning that James Parsons's Junto Capital Management dropped the largest position of all the hedgies monitored by Insider Monkey, worth about $72.9 million in stock. Amish Mehta's fund, SQN Investors, also sold off its stock, about $45.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 11 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) but similarly valued. We will take a look at FirstEnergy Corp. (NYSE:FE), Insulet Corporation (NASDAQ:PODD), Etsy Inc (NASDAQ:ETSY), Quest Diagnostics Incorporated (NYSE:DGX), Slack Technologies Inc (NYSE:WORK), EXACT Sciences Corporation (NASDAQ:EXAS), and Bio-Rad Laboratories, Inc. (NYSE:BIO). This group of stocks' market caps match SSNC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FE,59,1286114,18 PODD,38,1152530,-6 ETSY,51,1899908,8 DGX,42,412437,-4 WORK,20,164700,-12 EXAS,34,1113307,-9 BIO,48,1164966,-6 Average,41.7,1027709,-1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.7 hedge funds with bullish positions and the average amount invested in these stocks was $1028 million. That figure was $2314 million in SSNC's case. FirstEnergy Corp. (NYSE:FE) is the most popular stock in this table. On the other hand Slack Technologies Inc (NYSE:WORK) is the least popular one with only 20 bullish hedge fund positions. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SSNC is 62.5. 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. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on SSNC as the stock returned 15.9% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.