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Bottomline Technologies (EPAY): Hedge Funds Buying, But Sentiment Is Still Bearish

Does Bottomline Technologies (de), Inc. (NASDAQ:EPAY) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.

Bottomline Technologies (de), Inc. (NASDAQ:EPAY) was in 16 hedge funds’ portfolios at the end of June. EPAY investors should be aware of an increase in hedge fund interest recently. There were 15 hedge funds in our database with EPAY positions at the end of the previous quarter. Our calculations also showed that EPAY isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are a multitude of methods investors employ to value their stock investments. Some of the most under-the-radar methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best money managers can beat the S&P 500 by a healthy amount (see the details here).

AQR CAPITAL MANAGEMENT

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a gander at the new hedge fund action regarding Bottomline Technologies (de), Inc. (NASDAQ:EPAY).

What does smart money think about Bottomline Technologies (de), Inc. (NASDAQ:EPAY)?

At the end of the second quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the first quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in EPAY a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with EPAY Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the largest position in Bottomline Technologies (de), Inc. (NASDAQ:EPAY), worth close to $18.7 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, led by Cliff Asness, holding a $8.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions include Renaissance Technologies, Spencer M. Waxman’s Shannon River Fund Management and Dmitry Balyasny’s Balyasny Asset Management.

As industrywide interest jumped, some big names were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the biggest position in Bottomline Technologies (de), Inc. (NASDAQ:EPAY). Balyasny Asset Management had $4.7 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $4.2 million position during the quarter. The other funds with new positions in the stock are Ravee Mehta’s Nishkama Capital and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s check out hedge fund activity in other stocks similar to Bottomline Technologies (de), Inc. (NASDAQ:EPAY). These stocks are Fabrinet (NYSE:FN), Varonis Systems Inc (NASDAQ:VRNS), Minerals Technologies Inc (NYSE:MTX), and Eagle Bancorp, Inc. (NASDAQ:EGBN). This group of stocks’ market values are similar to EPAY’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FN 25 169778 5
VRNS 24 350819 -1
MTX 15 110784 1
EGBN 11 47787 0
Average 18.75 169792 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $170 million. That figure was $73 million in EPAY’s case. Fabrinet (NYSE:FN) is the most popular stock in this table. On the other hand Eagle Bancorp, Inc. (NASDAQ:EGBN) is the least popular one with only 11 bullish hedge fund positions. Bottomline Technologies (de), Inc. (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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately EPAY wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EPAY investors were disappointed as the stock returned -11.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

Disclosure: None. This article was originally published at Insider Monkey.

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