Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Endava plc (NYSE:DAVA) changed recently.
Is DAVA a good stock to buy now? Endava plc (NYSE:DAVA) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 9. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. DAVA shareholders have witnessed an increase in support from the world’s most elite money managers recently. There were 8 hedge funds in our database with DAVA holdings at the end of June. Our calculations also showed that DAVA 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are a large number of formulas stock traders employ to grade stocks. A pair of the most useful formulas are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best money managers can trounce the S&P 500 by a significant amount (see the details here).
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. Now we’re going to take a glance at the key hedge fund action surrounding Endava plc (NYSE:DAVA).
Do Hedge Funds Think DAVA Is A Good Stock To Buy Now?
At third quarter’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in DAVA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Endava plc (NYSE:DAVA) was held by Driehaus Capital, which reported holding $42.1 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $38.8 million position. Other investors bullish on the company included Renaissance Technologies, Adage Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Cheyne Capital allocated the biggest weight to Endava plc (NYSE:DAVA), around 1.06% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, earmarking 0.87 percent of its 13F equity portfolio to DAVA.
Consequently, specific money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Endava plc (NYSE:DAVA). Marshall Wace LLP had $38.8 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $2.9 million position during the quarter. The only other fund with a brand new DAVA position is Robert Joseph Caruso’s Select Equity Group.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Endava plc (NYSE:DAVA) but similarly valued. These stocks are Lazard Ltd (NYSE:LAZ), Stifel Financial Corp. (NYSE:SF), Brixmor Property Group Inc (NYSE:BRX), Proto Labs Inc (NYSE:PRLB), Inspire Medical Systems, Inc. (NYSE:INSP), UFP Industries, Inc. (NASDAQ:UFPI), and Semtech Corporation (NASDAQ:SMTC). This group of stocks’ market caps match DAVA’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 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $221 million. That figure was $131 million in DAVA’s case. Inspire Medical Systems, Inc. (NYSE:INSP) is the most popular stock in this table. On the other hand Proto Labs Inc (NYSE:PRLB) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Endava plc (NYSE:DAVA) is even less popular than PRLB. Our overall hedge fund sentiment score for DAVA is 38. 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. Hedge funds dodged a bullet by taking a bearish stance towards DAVA. Our calculations showed that the top 20 most popular hedge fund stocks 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 but managed to beat the market again by 16.2 percentage points. Unfortunately DAVA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); DAVA investors were disappointed as the stock returned 7.9% since the end of the third quarter (through 12/8) 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 most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.