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Amdocs Limited (DOX): Are Hedge Funds Right About This Stock?

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Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Amdocs Limited (NYSE:DOX).

Amdocs Limited (NYSE:DOX) was in 24 hedge funds’ portfolios at the end of the third quarter of 2016. DOX investors should pay attention to an increase in activity from the world’s largest hedge funds lately. There were 20 hedge funds in our database with DOX holdings at the end of the previous quarter. At the end of this article we will also compare DOX to other stocks including Cemex SAB de CV (ADR) (NYSE:CX), Juniper Networks, Inc. (NYSE:JNPR), and CDK Global Inc (NASDAQ:CDK) to get a better sense of its popularity.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Keeping this in mind, we’re going to review the latest action regarding Amdocs Limited (NYSE:DOX).

How are hedge funds trading Amdocs Limited (NYSE:DOX)?

At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

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When looking at the institutional investors followed by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in Amdocs Limited (NYSE:DOX). AQR Capital Management has a $147 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Charles de Vaulx of International Value Advisers, with a $92.6 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism consist of D. E. Shaw’s D E Shaw, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Bain Capital’s Brookside Capital.

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