Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Do Hedge Funds Love EPAM Systems Inc (EPAM)?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of EPAM Systems Inc (NYSE:EPAM).

EPAM Systems Inc (NYSE:EPAM) was in 21 hedge funds’ portfolios at the end of September. EPAM investors should be aware of a decrease in support from the world’s most elite money managers of late. There were 22 hedge funds in our database with EPAM positions at the end of the previous quarter. Our calculations also showed that EPAM isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Driehaus

Let’s check out the latest hedge fund action regarding EPAM Systems Inc (NYSE:EPAM).

How have hedgies been trading EPAM Systems Inc (NYSE:EPAM)?

At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EPAM over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

EPAM_dec2018

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, James Crichton’s Hitchwood Capital Management has the number one position in EPAM Systems Inc (NYSE:EPAM), worth close to $41.3 million, accounting for 0.6% of its total 13F portfolio. Coming in second is Richard Driehaus of Driehaus Capital, with a $34.4 million position; 1.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish comprise Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Brad Farber’s Atika Capital.

Since EPAM Systems Inc (NYSE:EPAM) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of funds that elected to cut their positions entirely heading into Q3. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest position of the 700 funds tracked by Insider Monkey, valued at close to $14.6 million in stock, and Hugh Sloane’s Sloane Robinson Investment Management was right behind this move, as the fund dumped about $7.2 million worth. These moves are important to note, as total hedge fund interest dropped by 1 funds heading into Q3.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as EPAM Systems Inc (NYSE:EPAM) but similarly valued. We will take a look at RingCentral Inc (NYSE:RNG), Logitech International SA (NASDAQ:LOGI), Nutanix, Inc. (NASDAQ:NTNX), and Ares Capital Corporation (NASDAQ:ARCC). This group of stocks’ market valuations are closest to EPAM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RNG 42 1084469 2
LOGI 19 286411 3
NTNX 39 652637 5
ARCC 25 285375 2
Average 31.25 577223 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $577 million. That figure was $165 million in EPAM’s case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand Logitech International SA (NASDAQ:LOGI) is the least popular one with only 19 bullish hedge fund positions. EPAM Systems Inc (NYSE:EPAM) 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 RNG might be a better candidate to consider a long position.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...