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Hedge Funds Are Coming Back To Qualys Inc (QLYS)

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 Qualys Inc (NASDAQ:QLYS) and determine whether the smart money was really smart about this stock.

Qualys Inc (NASDAQ:QLYS) was in 27 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 29. QLYS investors should pay attention to an increase in activity from the world’s largest hedge funds recently. There were 17 hedge funds in our database with QLYS positions at the end of the first quarter. Our calculations also showed that QLYS 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 take a peek at the latest hedge fund action surrounding Qualys Inc (NASDAQ:QLYS).

What have hedge funds been doing with Qualys Inc (NASDAQ:QLYS)?

At second quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 59% from the first quarter of 2020. On the other hand, there were a total of 17 hedge funds with a bullish position in QLYS a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is QLYS A Good Stock To Buy?

The largest stake in Qualys Inc (NASDAQ:QLYS) was held by Renaissance Technologies, which reported holding $53.2 million worth of stock at the end of September. It was followed by GLG Partners with a $25.9 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Portolan Capital Management allocated the biggest weight to Qualys Inc (NASDAQ:QLYS), around 0.78% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, dishing out 0.31 percent of its 13F equity portfolio to QLYS.

Consequently, some big names were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in Qualys Inc (NASDAQ:QLYS). Arrowstreet Capital had $5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $3 million investment in the stock during the quarter. The other funds with brand new QLYS positions are Parvinder Thiara’s Athanor Capital, Benjamin A. Smith’s Laurion Capital Management, and Greg Eisner’s Engineers Gate Manager.

Let’s go over hedge fund activity in other stocks similar to Qualys Inc (NASDAQ:QLYS). We will take a look at MSC Industrial Direct Co Inc (NYSE:MSM), Grupo Aeroportuario del Pacifico (NYSE:PAC), Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), TFS Financial Corporation (NASDAQ:TFSL), AerCap Holdings N.V. (NYSE:AER), Manpowergroup Inc (NYSE:MAN), and Integra Lifesciences Holdings Corp (NASDAQ:IART). All of these stocks’ market caps resemble QLYS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MSM 30 389200 7
PAC 7 103052 2
IOVA 43 1341814 4
TFSL 11 122677 2
AER 30 934619 -2
MAN 34 377077 11
IART 23 101326 1
Average 25.4 481395 3.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.4 hedge funds with bullish positions and the average amount invested in these stocks was $481 million. That figure was $168 million in QLYS’s case. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacifico (NYSE:PAC) is the least popular one with only 7 bullish hedge fund positions. Qualys Inc (NASDAQ:QLYS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for QLYS is 65.7. 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 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately QLYS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on QLYS were disappointed as the stock returned -4.6% during the same time period 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.