Is Paysign, Inc. (NASDAQ:PAYS) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Paysign, Inc. (NASDAQ:PAYS) investors should pay attention to an increase in support from the world’s most elite money managers lately. Our calculations also showed that PAYS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s go over the fresh hedge fund action encompassing Paysign, Inc. (NASDAQ:PAYS).
Hedge fund activity in Paysign, Inc. (NASDAQ:PAYS)
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PAYS over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Paysign, Inc. (NASDAQ:PAYS), which was worth $21.7 million at the end of the third quarter. On the second spot was Sculptor Capital which amassed $2.1 million worth of shares. Raging Capital Management, Navellier & Associates, and Paloma Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Raging Capital Management allocated the biggest weight to Paysign, Inc. (NASDAQ:PAYS), around 0.26% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, dishing out 0.22 percent of its 13F equity portfolio to PAYS.
Consequently, specific money managers were breaking ground themselves. Sculptor Capital assembled the most outsized position in Paysign, Inc. (NASDAQ:PAYS). Sculptor Capital had $2.1 million invested in the company at the end of the quarter. William C. Martin’s Raging Capital Management also made a $1.6 million investment in the stock during the quarter. The following funds were also among the new PAYS investors: Donald Sussman’s Paloma Partners, Israel Englander’s Millennium Management, and Cliff Asness’s AQR Capital Management.
Let’s check out hedge fund activity in other stocks similar to Paysign, Inc. (NASDAQ:PAYS). These stocks are Independent Bank Corporation (NASDAQ:IBCP), Akorn, Inc. (NASDAQ:AKRX), SilverCrest Metals Inc. (NYSE:SILV), and RISE Education Cayman Ltd (NASDAQ:REDU). All of these stocks’ market caps match PAYS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $30 million in PAYS’s case. Akorn, Inc. (NASDAQ:AKRX) is the most popular stock in this table. On the other hand SilverCrest Metals Inc. (NYSE:SILV) is the least popular one with only 3 bullish hedge fund positions. Paysign, Inc. (NASDAQ:PAYS) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately PAYS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PAYS were disappointed as the stock returned 1.6% during the fourth quarter (through the end of November) 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.
Disclosure: None. This article was originally published at Insider Monkey.