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Do Hedge Funds Love ePlus Inc. (PLUS)?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded ePlus Inc. (NASDAQ:PLUS) based on those filings.

Hedge fund interest in ePlus Inc. (NASDAQ:PLUS) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare PLUS to other stocks including H&E Equipment Services, Inc. (NASDAQ:HEES), 2U Inc (NASDAQ:TWOU), and Weis Markets, Inc. (NYSE:WMK) to get a better sense of its popularity.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are several signals stock market investors have at their disposal to assess stocks. Some of the less known signals are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can trounce the broader indices by a superb amount (see the details here).

Ken Griffin

Ken Griffin of Citadel Investment Group

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a peek at the new hedge fund action encompassing ePlus Inc. (NASDAQ:PLUS).

What does smart money think about ePlus Inc. (NASDAQ:PLUS)?

Heading into the fourth quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PLUS over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in ePlus Inc. (NASDAQ:PLUS) was held by Millennium Management, which reported holding $10.8 million worth of stock at the end of September. It was followed by D E Shaw with a $8.1 million position. Other investors bullish on the company included AQR Capital Management, Citadel Investment Group, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to ePlus Inc. (NASDAQ:PLUS), around 0.46% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, designating 0.15 percent of its 13F equity portfolio to PLUS.

Due to the fact that ePlus Inc. (NASDAQ:PLUS) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers that decided to sell off their positions entirely last quarter. Intriguingly, Paul Tudor Jones’s Tudor Investment Corp sold off the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $0.6 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also sold off its stock, about $0.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to ePlus Inc. (NASDAQ:PLUS). We will take a look at H&E Equipment Services, Inc. (NASDAQ:HEES), 2U Inc (NASDAQ:TWOU), Weis Markets, Inc. (NYSE:WMK), and GreenTree Hospitality Group Ltd. (NYSE:GHG). This group of stocks’ market values resemble PLUS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HEES 13 52420 1
TWOU 14 88368 0
WMK 15 64020 2
GHG 7 23891 2
Average 12.25 57175 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $43 million in PLUS’s case. Weis Markets, Inc. (NYSE:WMK) is the most popular stock in this table. On the other hand GreenTree Hospitality Group Ltd. (NYSE:GHG) is the least popular one with only 7 bullish hedge fund positions. ePlus Inc. (NASDAQ:PLUS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on PLUS, though not to the same extent, as the stock returned 9.8% during the first two months of the fourth quarter and outperformed the market.

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

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