Is CSG Systems International, Inc. (NASDAQ:CSGS) 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.
Is CSGS a good stock to buy according to hedge funds? Hedge fund interest in CSG Systems International, Inc. (NASDAQ:CSGS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CSGS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Monro Inc (NASDAQ:MNRO), Marten Transport, Ltd (NASDAQ:MRTN), and Patrick Industries, Inc. (NASDAQ:PATK) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind let’s take a look at the fresh hedge fund action encompassing CSG Systems International, Inc. (NASDAQ:CSGS).
Do Hedge Funds Think CSGS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CSGS over the last 21 quarters. So, let’s check out 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 $70 million reported as of the end of September. Trailing Renaissance Technologies was Polar Capital, which amassed a stake valued at $28.6 million. Value Holdings LP, Arrowstreet Capital, and Millennium Management 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 Value Holdings LP allocated the biggest weight to CSG Systems International, Inc. (NASDAQ:CSGS), around 4.61% of its 13F portfolio. Polar Capital is also relatively very bullish on the stock, setting aside 0.22 percent of its 13F equity portfolio to CSGS.
Due to the fact that CSG Systems International, Inc. (NASDAQ:CSGS) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there were a few hedge funds who were dropping their entire stakes in the third quarter. Interestingly, Brandon Haley’s Holocene Advisors dumped the largest position of the 750 funds tracked by Insider Monkey, worth an estimated $0.9 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dropped its stock, about $0.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to CSG Systems International, Inc. (NASDAQ:CSGS). We will take a look at Monro Inc (NASDAQ:MNRO), Marten Transport, Ltd (NASDAQ:MRTN), Patrick Industries, Inc. (NASDAQ:PATK), Purple Innovation, Inc. (NASDAQ:PRPL), Heron Therapeutics Inc (NASDAQ:HRTX), World Fuel Services Corporation (NYSE:INT), and Compugen Ltd. (NASDAQ:CGEN). This group of stocks’ market valuations are closest to CSGS’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $189 million. That figure was $153 million in CSGS’s case. Purple Innovation, Inc. (NASDAQ:PRPL) is the most popular stock in this table. On the other hand Monro Inc (NASDAQ:MNRO) is the least popular one with only 14 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 51.9. 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. 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 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on CSGS as the stock returned 12.1% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.