Is Amdocs Limited (DOX) A Good Stock To Buy?

Is Amdocs Limited (NYSE:DOX) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.

Is Amdocs Limited a buy right now? Hedge funds are turning bullish. The number of bullish hedge fund positions moved up by 5 lately. DOX was in 26 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with DOX positions 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 NetApp Inc. (NASDAQ:NTAP), Masco Corporation (NYSE:MAS), and Advanced Semiconductor Engineering (ADR) (NYSE:ASX) to gather more data points.

In today’s marketplace there are dozens of metrics investors use to value publicly traded companies. Some of the most underrated metrics are hedge fund and insider trading moves. our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outperform the broader indices by a superb amount (see the details here).

With all of this in mind, we’re going to take a look at the fresh action regarding Amdocs Limited (NYSE:DOX).

Hedge fund activity in Amdocs Limited (NYSE:DOX)

At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies, managed by Jim Simons, holds the largest position in Amdocs Limited (NYSE:DOX). Renaissance Technologies has a $137.6 million position in the stock, comprising 0.3% of its 13F portfolio. The second most bullish fund manager is International Value Advisers, led by Charles de Vaulx, holding a $106.1 million stake; the fund has 2.8% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions encompass Cliff Asness’s AQR Capital Management and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

As industrywide interest jumped, some big names have been driving this bullishness. Chilton Investment Company, managed by Richard Chilton, established the most outsized position in Amdocs Limited (NYSE:DOX). Chilton Investment Company had $57.7 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $6.3 million position during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners, Thomas Bailard’s Bailard Inc, and Ken Griffin’s Citadel Investment Group.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Amdocs Limited (NYSE:DOX) but similarly valued. We will take a look at NetApp Inc. (NASDAQ:NTAP), Masco Corporation (NYSE:MAS), Advanced Semiconductor Engineering (ADR) (NYSE:ASX), and LKQ Corporation (NASDAQ:LKQ). All of these stocks’ market caps resemble DOX’s market cap.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $613 million. Masco Corporation (NYSE:MAS) is the most popular stock in this table, while Advanced Semiconductor Engineering (ADR) (NYSE:ASX) is the least popular one with only 13 bullish hedge fund positions. By comparison, hedge funds amassed $603 million worth of Amdocs Limited (NYSE:DOX)’s shares and even though it is not the least popular stock in this group, the 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 MAS might be a better candidate to consider a long position.