Here is What Hedge Funds Think About ePlus Inc. (PLUS)

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about ePlus Inc. (NASDAQ:PLUS) in this article.

ePlus Inc. (NASDAQ:PLUS) has seen a decrease in hedge fund sentiment recently. PLUS was in 12 hedge funds’ portfolios at the end of the third quarter of 2015. There were 14 hedge funds in our database with PLUS holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), Avianca Holdings SA (ADR) (NYSE:AVH), and WCI Communities Inc (NYSE:WCIC) to gather more data points.

According to most stock holders, hedge funds are seen as worthless, old financial tools of years past. While there are greater than 8000 funds with their doors open today, Our researchers choose to focus on the leaders of this club, about 700 funds. These investment experts shepherd the majority of the smart money’s total asset base, and by observing their matchless picks, Insider Monkey has unsheathed many investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, let’s go over the fresh action surrounding ePlus Inc. (NASDAQ:PLUS).

How have hedgies been trading ePlus Inc. (NASDAQ:PLUS)?

Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 14% from the second quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in ePlus Inc. (NASDAQ:PLUS). Royce & Associates has an $12.1 million position in the stock, comprising 0.1% of its 13F portfolio. On Royce & Associates’s heels is Legg Mason Capital Management, with a $7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism encompass Cliff Asness’s AQR Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and D. E. Shaw’s D E Shaw.

Seeing as ePlus Inc. (NASDAQ:PLUS) has experienced a bearish sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of money managers that elected to cut their entire stakes last quarter. Intriguingly, John H. Lewis’ Osmium Partners said goodbye to the largest position of the “upper crust” of funds followed by Insider Monkey, valued at about $5 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund said goodbye to about $1.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ePlus Inc. (NASDAQ:PLUS) but similarly valued. We will take a look at 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), Avianca Holdings SA (ADR) (NYSE:AVH), WCI Communities Inc (NYSE:WCIC), and H&E Equipment Services, Inc. (NASDAQ:HEES). This group of stocks’ market caps resemble PLUS’s market cap.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $57 million, compared $31 million in PLUS’s case. WCI Communities Inc (NYSE:WCIC) is the most popular stock in this table, while Avianca Holdings SA (ADR) (NYSE:AVH) is the least popular one with only 4 bullish hedge fund positions. ePlus Inc. (NASDAQ:PLUS) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WCIC might be a better candidate to consider a long position.