Is SPS Commerce, Inc. (NASDAQ:SPSC) going to take off soon? The best stock pickers are getting less optimistic. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience
To most market participants, hedge funds are viewed as worthless, old investment tools of yesteryear. While there are more than 8000 funds in operation at the moment, we look at the bigwigs of this club, about 450 funds. It is estimated that this group controls most of the hedge fund industry’s total asset base, and by watching their best investments, we have uncovered a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as important, optimistic insider trading activity is another way to break down the world of equities. As the old adage goes: there are plenty of incentives for an upper level exec to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this tactic if investors understand where to look (learn more here).
With these “truths” under our belt, we’re going to take a gander at the latest action surrounding SPS Commerce, Inc. (NASDAQ:SPSC).
How are hedge funds trading SPS Commerce, Inc. (NASDAQ:SPSC)?
At the end of the first quarter, a total of 5 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully.
According to our comprehensive database, Driehaus Capital, managed by Richard Driehaus, holds the most valuable position in SPS Commerce, Inc. (NASDAQ:SPSC). Driehaus Capital has a $4.9 million position in the stock, comprising 0.2% of its 13F portfolio. On Driehaus Capital’s heels is Columbus Circle Investors, managed by Donald Chiboucis, which held a $1.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners, Cliff Asness’s AQR Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.
Due to the fact that SPS Commerce, Inc. (NASDAQ:SPSC) has witnessed declining sentiment from the smart money, it’s safe to say that there were a few funds who sold off their positions entirely in Q1. Intriguingly, Paul Tudor Jones’s Tudor Investment Corp dumped the largest position of the 450+ funds we track, valued at an estimated $0.2 million in stock. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How have insiders been trading SPS Commerce, Inc. (NASDAQ:SPSC)?
Insider purchases made by high-level executives is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the latest 180-day time period, SPS Commerce, Inc. (NASDAQ:SPSC) has experienced zero unique insiders buying, and 6 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to SPS Commerce, Inc. (NASDAQ:SPSC). These stocks are SciQuest, Inc. (NASDAQ:SQI), Accelrys, Inc. (NASDAQ:ACCL), BroadSoft Inc (NASDAQ:BSFT), Proofpoint Inc (NASDAQ:PFPT), and Ellie Mae Inc (NYSE:ELLI). All of these stocks are in the application software industry and their market caps match SPSC’s market cap.