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Hedge Funds Are Coming Back To CSG Systems International, Inc. (CSGS)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded CSG Systems International, Inc. (NASDAQ:CSGS) and determine whether the smart money was really smart about this stock.

CSG Systems International, Inc. (NASDAQ:CSGS) investors should pay attention to an increase in enthusiasm from smart money lately. CSG Systems International, Inc. (NASDAQ:CSGS) was in 22 hedge funds’ portfolios at the end of June. The all time high for this statistics is 23. There were 19 hedge funds in our database with CSGS positions at the end of the first quarter. Our calculations also showed that CSGS isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

Today there are a multitude of formulas shareholders put to use to grade stocks. A pair of the most underrated formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can beat their index-focused peers by a healthy margin (see the details here).

Izzy Englander of MILLENNIUM MANAGEMENT

Israel Englander of Millennium Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world 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. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind let’s review the fresh hedge fund action surrounding CSG Systems International, Inc. (NASDAQ:CSGS).

How are hedge funds trading CSG Systems International, Inc. (NASDAQ:CSGS)?

Heading into the third quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from the first quarter of 2020. By comparison, 18 hedge funds held shares or bullish call options in CSGS a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in CSG Systems International, Inc. (NASDAQ:CSGS) was held by Renaissance Technologies, which reported holding $86.1 million worth of stock at the end of September. It was followed by Polar Capital with a $28.1 million position. Other investors bullish on the company included Value Holdings LP, Arrowstreet Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Value Holdings LP allocated the biggest weight to CSG Systems International, Inc. (NASDAQ:CSGS), around 4.86% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, designating 0.82 percent of its 13F equity portfolio to CSGS.

As aggregate interest increased, key money managers have been driving this bullishness. PDT Partners, managed by Peter Muller, initiated the most valuable position in CSG Systems International, Inc. (NASDAQ:CSGS). PDT Partners had $1.6 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $0.8 million investment in the stock during the quarter. The other funds with brand new CSGS positions are Mika Toikka’s AlphaCrest Capital Management, Qing Li’s Sciencast Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s now take a look at hedge fund activity in other stocks similar to CSG Systems International, Inc. (NASDAQ:CSGS). These stocks are TowneBank (NASDAQ:TOWN), Essential Properties Realty Trust, Inc. (NYSE:EPRT), Navient Corp (NASDAQ:NAVI), NMI Holdings Inc (NASDAQ:NMIH), WesBanco, Inc. (NASDAQ:WSBC), Cortexyme, Inc. (NASDAQ:CRTX), and Bloom Energy Corporation (NYSE:BE). This group of stocks’ market valuations resemble CSGS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TOWN 9 27236 5
EPRT 13 61662 5
NAVI 27 209751 -6
NMIH 30 173229 7
WSBC 13 44583 4
CRTX 6 21086 0
BE 16 110425 6
Average 16.3 92567 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $168 million in CSGS’s case. NMI Holdings Inc (NASDAQ:NMIH) is the most popular stock in this table. On the other hand Cortexyme, Inc. (NASDAQ:CRTX) is the least popular one with only 6 bullish hedge fund positions. CSG Systems International, Inc. (NASDAQ:CSGS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CSGS is 70. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately CSGS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CSGS were disappointed as the stock returned -0.5% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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