Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Quality Systems, Inc. (NASDAQ:QSII) and see how the stock is affected by the recent hedge fund activity.
Quality Systems, Inc. (NASDAQ:QSII) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 17 hedge funds’ portfolios at the end of the third quarter of 2015. At the end of this article we will also compare QSII to other stocks including Leju Holdings Ltd (ADR) (NYSE:LEJU), U.S. Silica Holdings Inc (NYSE:SLCA), and RPX Corp (NASDAQ:RPXC) to get a better sense of its popularity.
In the financial world there are plenty of signals shareholders can use to size up stocks. A couple of the most under-the-radar signals are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outclass the S&P 500 by a significant margin (see the details here).
Now, we’re going to take a look at the fresh action regarding Quality Systems, Inc. (NASDAQ:QSII).
What does the smart money think about Quality Systems, Inc. (NASDAQ:QSII)?
When looking at the institutional investors followed by Insider Monkey, Conan Laughlin’s North Tide Capital has the biggest position in Quality Systems, Inc. (NASDAQ:QSII), worth close to $12.7 million, accounting for 1.1% of its total 13F portfolio. The second largest stake is held by Gotham Asset Management, led by Joel Greenblatt, holding a $8.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism include Thomas Ellis and Todd Hammer’s North Run Capital, Jim Simons’ Renaissance Technologies and Dmitry Balyasny’s Balyasny Asset Management.
Intriguingly, Israel Englander’s Millennium Management said goodbye to the largest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $6.1 million in stock. Neil Chriss’ fund, Hutchin Hill Capital, also dumped its stock, about $0.9 million worth. These bearish behaviors are interesting, 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 – not necessarily in the same industry as Quality Systems, Inc. (NASDAQ:QSII) but similarly valued. These stocks are Leju Holdings Ltd (ADR) (NYSE:LEJU), U.S. Silica Holdings Inc (NYSE:SLCA), RPX Corp (NASDAQ:RPXC), and Meridian Interstate Bancorp, Inc. (NASDAQ:EBSB). All of these stocks’ market caps are closest to QSII’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $111 million. That figure was $48 million in QSII’s case. U.S. Silica Holdings Inc (NYSE:SLCA) is the most popular stock in this table. On the other hand Leju Holdings Ltd (ADR) (NYSE:LEJU) is the least popular one with only 12 bullish hedge fund positions. Quality Systems, Inc. (NASDAQ:QSII) is not the least popular stock in this group but hedge fund interest is just 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 SLCA might be a better candidate to consider a long position.