Is Bottomline Technologies (EPAY) A Good Stock To Buy?

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As industrywide interest jumped, key money managers were breaking ground themselves. Quant hedge fund D E Shaw initiated the biggest position in Bottomline Technologies (NASDAQ:EPAY). D E Shaw had $5 million invested in the company at the end of the quarter. Sheetal Duggal’s Thrax Management also initiated a $3.2 million position during the quarter. The other funds with new positions in the stock are Cliff Asness’s AQR Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Josh Goldberg’s G2 Investment Partners Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Bottomline Technologies (NASDAQ:EPAY) but similarly valued. These stocks are Nevsun Resources (USA) (NYSEAMEX:NSU), Merit Medical Systems, Inc. (NASDAQ:MMSI), Dermira Inc (NASDAQ:DERM), and Luminex Corporation (NASDAQ:LMNX). This group of stocks’ market caps match EPAY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NSU 12 61168 0
MMSI 16 63862 -2
DERM 29 204585 5
LMNX 14 109857 -7

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $51 million in EPAY’s case. Dermira Inc (NASDAQ:DERM) is the most popular stock in this table. On the other hand Nevsun Resources (USA) (NYSEAMEX:NSU) is the least popular one with only 12 bullish hedge fund positions. Bottomline Technologies (NASDAQ:EPAY) 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 DERM might be a better candidate to consider taking a long position in.

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