Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That’s why we pay special attention to hedge fund activity in these stocks.
Is ANSYS, Inc. (NASDAQ:ANSS) ready to rally soon? Investors who are in the know are taking an optimistic view. The number of bullish hedge fund positions rose by 1 recently. Our calculations also showed that anss isn’t among the 30 most popular stocks among hedge funds. ANSS was in 26 hedge funds’ portfolios at the end of September. There were 25 hedge funds in our database with ANSS holdings at the end of the previous quarter.
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.
Cliff Asness of AQR Capital Management
Let’s take a gander at the fresh hedge fund action surrounding ANSYS, Inc. (NASDAQ:ANSS).
What have hedge funds been doing with ANSYS, Inc. (NASDAQ:ANSS)?
At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the second quarter of 2018. On the other hand, there were a total of 27 hedge funds with a bullish position in ANSS at the beginning of this year. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Select Equity Group held the most valuable stake in ANSYS, Inc. (NASDAQ:ANSS), which was worth $163.2 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $86.1 million worth of shares. Moreover, Polar Capital, Marshall Wace LLP, and Intermede Investment Partners were also bullish on ANSYS, Inc. (NASDAQ:ANSS), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Springbok Capital, managed by Gavin Saitowitz and Cisco J. del Valle, established the most outsized position in ANSYS, Inc. (NASDAQ:ANSS). Springbok Capital had $0.4 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $0.3 million position during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ANSYS, Inc. (NASDAQ:ANSS) but similarly valued. We will take a look at Veeva Systems Inc (NYSE:VEEV), Equifax Inc. (NYSE:EFX), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), and Maxim Integrated Products Inc. (NASDAQ:MXIM). This group of stocks’ market values are similar to ANSS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VEEV | 31 | 558595 | 2 |
| EFX | 35 | 2075715 | 0 |
| TTWO | 58 | 2336400 | 2 |
| MXIM | 30 | 579428 | 5 |
| Average | 38.5 | 1387535 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.39 billion. That figure was $587 million in ANSS’s case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand Maxim Integrated Products Inc. (NASDAQ:MXIM) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks ANSYS, Inc. (NASDAQ:ANSS) is even less popular than MXIM. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None. This article was originally published at Insider Monkey.
