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.
Follow Amdocs Ltd (NASDAQ:DOX)
Follow Amdocs Ltd (NASDAQ:DOX)
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.
kentoh/Shutterstock.com
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).
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.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Amdocs Limited (NYSE:DOX) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, assembled the most valuable position in Amdocs Limited (NYSE:DOX). Adage Capital Management had $13 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $0.8 million investment in the stock during the quarter. The other funds with brand new DOX positions are Joel Greenblatt’s Gotham Asset Management, Ken Griffin’s Citadel Investment Group, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Amdocs Limited (NYSE:DOX) but similarly valued. These stocks are Cemex SAB de CV (ADR) (NYSE:CX), Juniper Networks, Inc. (NYSE:JNPR), CDK Global Inc (NASDAQ:CDK), and The Valspar Corporation (NYSE:VAL). This group of stocks’ market valuations match DOX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CX | 24 | 532753 | 5 |
| JNPR | 27 | 477518 | 0 |
| CDK | 42 | 2747540 | -3 |
| VAL | 26 | 552761 | 1 |
As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $1078 million. That figure was $603 million in DOX’s case. CDK Global Inc (NASDAQ:CDK) is the most popular stock in this table. On the other hand Cemex SAB de CV (ADR) (NYSE:CX) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Amdocs Limited (NYSE:DOX) is even less popular than CX. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Suggested Articles:
European Countries With The Highest Military Strength
Super Easy Country Guitar Songs For Beginners
Biggest Ecommerce Websites In The World
Disclosure: None
