We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2019. In this article we are going to take a look at smart money sentiment towards Aspen Technology, Inc. (NASDAQ:AZPN).
Aspen Technology, Inc. (NASDAQ:AZPN) was in 37 hedge funds’ portfolios at the end of December. AZPN has experienced an increase in enthusiasm from smart money of late. There were 31 hedge funds in our database with AZPN positions at the end of the previous quarter. Our calculations also showed that AZPN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Tudor Jones of Tudor Investment Corp
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a glance at the fresh hedge fund action encompassing Aspen Technology, Inc. (NASDAQ:AZPN).
What have hedge funds been doing with Aspen Technology, Inc. (NASDAQ:AZPN)?
Heading into the first quarter of 2020, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AZPN over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in Aspen Technology, Inc. (NASDAQ:AZPN) was held by Alkeon Capital Management, which reported holding $246.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $237.5 million position. Other investors bullish on the company included Fisher Asset Management, Citadel Investment Group, and Two Creeks Capital Management. In terms of the portfolio weights assigned to each position Two Creeks Capital Management allocated the biggest weight to Aspen Technology, Inc. (NASDAQ:AZPN), around 7.22% of its 13F portfolio. Waratah Capital Advisors is also relatively very bullish on the stock, dishing out 4.64 percent of its 13F equity portfolio to AZPN.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Oribel Capital Management, managed by Mikal Patel, established the most outsized position in Aspen Technology, Inc. (NASDAQ:AZPN). Oribel Capital Management had $15.5 million invested in the company at the end of the quarter. William Heard’s Heard Capital also made a $5.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Paul Tudor Jones’s Tudor Investment Corp, and Jonathan Soros’s JS Capital.
Let’s now review hedge fund activity in other stocks similar to Aspen Technology, Inc. (NASDAQ:AZPN). We will take a look at Juniper Networks, Inc. (NYSE:JNPR), China Southern Airlines Co Ltd (NYSE:ZNH), AerCap Holdings N.V. (NYSE:AER), and Catalent Inc (NYSE:CTLT). All of these stocks’ market caps are closest to AZPN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JNPR | 37 | 734511 | 5 |
| ZNH | 3 | 13907 | 1 |
| AER | 36 | 1423682 | 5 |
| CTLT | 21 | 390050 | -8 |
| Average | 24.25 | 640538 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $641 million. That figure was $1278 million in AZPN’s case. Juniper Networks, Inc. (NYSE:JNPR) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 3 bullish hedge fund positions. Aspen Technology, Inc. (NASDAQ:AZPN) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately AZPN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AZPN were disappointed as the stock returned -26.9% 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
