The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Cognizant Technology Solutions Corp (NASDAQ:CTSH).
Is CTSH a good stock to buy now? The best stock pickers were taking an optimistic view. The number of long hedge fund positions moved up by 6 recently. Cognizant Technology Solutions Corp (NASDAQ:CTSH) was in 45 hedge funds’ portfolios at the end of September. The all time high for this statistic is 55. Our calculations also showed that CTSH 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). There were 39 hedge funds in our database with CTSH holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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Do Hedge Funds Think CTSH Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in CTSH 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.
The largest stake in Cognizant Technology Solutions Corp (NASDAQ:CTSH) was held by Generation Investment Management, which reported holding $1120.3 million worth of stock at the end of September. It was followed by Pzena Investment Management with a $610.7 million position. Other investors bullish on the company included Diamond Hill Capital, Yacktman Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Broad Peak Investment Holdings allocated the biggest weight to Cognizant Technology Solutions Corp (NASDAQ:CTSH), around 6.88% of its 13F portfolio. Generation Investment Management is also relatively very bullish on the stock, designating 5.95 percent of its 13F equity portfolio to CTSH.
As aggregate interest increased, some big names were breaking ground themselves. Junto Capital Management, managed by James Parsons, initiated the largest position in Cognizant Technology Solutions Corp (NASDAQ:CTSH). Junto Capital Management had $104.6 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $31.1 million position during the quarter. The other funds with new positions in the stock are Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, Matthew Hulsizer’s PEAK6 Capital Management, and James Dondero’s Highland Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cognizant Technology Solutions Corp (NASDAQ:CTSH) but similarly valued. These stocks are Bank of Montreal (NYSE:BMO), BCE Inc. (NYSE:BCE), Prudential Public Limited Company (NYSE:PUK), Banco Santander (Brasil) SA (NYSE:BSBR), L3Harris Technologies, Inc. (NYSE:LHX), The Kraft Heinz Company (NASDAQ:KHC), and Constellation Brands, Inc. (NYSE:STZ). This group of stocks’ market values match CTSH’s market value.
|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 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $1953 million. That figure was $3326 million in CTSH’s case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand Prudential Public Limited Company (NYSE:PUK) is the least popular one with only 4 bullish hedge fund positions. Cognizant Technology Solutions Corp (NASDAQ:CTSH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CTSH is 76.4. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on CTSH as the stock returned 15.4% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.