Hedge Funds Are Dumping CSG Systems International, Inc. (CSGS)

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

CSG Systems International, Inc. (NASDAQ:CSGS) investors should pay attention to a decrease in enthusiasm from smart money recently. Our calculations also showed that CSGS isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? 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.


We’re going to take a look at the latest hedge fund action surrounding CSG Systems International, Inc. (NASDAQ:CSGS).

Hedge fund activity in CSG Systems International, Inc. (NASDAQ:CSGS)

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in CSGS over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


More specifically, Renaissance Technologies was the largest shareholder of CSG Systems International, Inc. (NASDAQ:CSGS), with a stake worth $94.1 million reported as of the end of September. Trailing Renaissance Technologies was Polar Capital, which amassed a stake valued at $12.7 million. Citadel Investment Group, Millennium Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.

Due to the fact that CSG Systems International, Inc. (NASDAQ:CSGS) has experienced a decline in interest from the smart money, it’s safe to say that there were a few hedge funds who were dropping their full holdings in the third quarter. It’s worth mentioning that David Costen Haley’s HBK Investments said goodbye to the largest position of all the hedgies tracked by Insider Monkey, worth an estimated $0.4 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also said goodbye to its stock, about $0.3 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds in the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as CSG Systems International, Inc. (NASDAQ:CSGS) but similarly valued. We will take a look at DBV Technologies S.A. (NASDAQ:DBVT), The E.W. Scripps Company (NASDAQ:SSP), H&E Equipment Services, Inc. (NASDAQ:HEES), and Kinsale Capital Group, Inc. (NASDAQ:KNSL). This group of stocks’ market caps resemble CSGS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DBVT 9 279458 -1
SSP 12 206558 -3
HEES 13 32600 0
KNSL 5 9572 -2
Average 9.75 132047 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $150 million in CSGS’s case. H&E Equipment Services, Inc. (NASDAQ:HEES) is the most popular stock in this table. On the other hand Kinsale Capital Group, Inc. (NASDAQ:KNSL) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks CSG Systems International, Inc. (NASDAQ:CSGS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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