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Did Hedge Funds Make The Right Call On Bottomline Technologies (de), Inc. (EPAY)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thought Bottomline Technologies (de), Inc. (NASDAQ:EPAY) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Bottomline Technologies (de), Inc. (NASDAQ:EPAY) investors should be aware of an increase in hedge fund interest of late. Our calculations also showed that EPAY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are several formulas shareholders put to use to appraise stocks. Some of the most under-the-radar formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can outclass the broader indices by a solid margin (see the details here).

TUDOR INVESTMENT CORP

Paul Tudor Jones of Tudor Investment Corp

At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now let’s check out the fresh hedge fund action encompassing Bottomline Technologies (de), Inc. (NASDAQ:EPAY).

How are hedge funds trading Bottomline Technologies (de), Inc. (NASDAQ:EPAY)?

At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in EPAY over the last 18 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Among these funds, MIG Capital held the most valuable stake in Bottomline Technologies (de), Inc. (NASDAQ:EPAY), which was worth $37.1 million at the end of the third quarter. On the second spot was D E Shaw which amassed $9.2 million worth of shares. Citadel Investment Group, Fisher Asset Management, and Intrinsic Edge Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position MIG Capital allocated the biggest weight to Bottomline Technologies (de), Inc. (NASDAQ:EPAY), around 4.37% of its 13F portfolio. Clearline Capital is also relatively very bullish on the stock, setting aside 1.22 percent of its 13F equity portfolio to EPAY.

Now, specific money managers were leading the bulls’ herd. Intrinsic Edge Capital, managed by Mark Coe, initiated the largest position in Bottomline Technologies (de), Inc. (NASDAQ:EPAY). Intrinsic Edge Capital had $5.2 million invested in the company at the end of the quarter. Mika Toikka’s AlphaCrest Capital Management also initiated a $0.5 million position during the quarter. The other funds with brand new EPAY positions are Paul Tudor Jones’s Tudor Investment Corp, Noam Gottesman’s GLG Partners, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s go over hedge fund activity in other stocks similar to Bottomline Technologies (de), Inc. (NASDAQ:EPAY). We will take a look at Goosehead Insurance, Inc. (NASDAQ:GSHD), Alliance Data Systems Corporation (NYSE:ADS), Plexus Corp. (NASDAQ:PLXS), and Turning Point Therapeutics, Inc. (NASDAQ:TPTX). This group of stocks’ market values are closest to EPAY’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GSHD 11 62673 2
ADS 30 245871 -15
PLXS 16 63502 -8
TPTX 19 360455 -4
Average 19 183125 -6.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $73 million in EPAY’s case. Alliance Data Systems Corporation (NYSE:ADS) is the most popular stock in this table. On the other hand Goosehead Insurance, Inc. (NASDAQ:GSHD) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on EPAY as the stock returned 33.3% since the end of March and outperformed the market by an even larger margin.

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