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 Sapiens International Corporation N.V. (NASDAQ:SPNS) changed recently.
Is SPNS a good stock to buy now? Prominent investors were in an optimistic mood. The number of bullish hedge fund positions went up by 5 in recent months. Sapiens International Corporation N.V. (NASDAQ:SPNS) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 10. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SPNS 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a 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 peek at the fresh hedge fund action regarding Sapiens International Corporation N.V. (NASDAQ:SPNS).
Do Hedge Funds Think SPNS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 83% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SPNS over the last 21 quarters. 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 Sapiens International Corporation N.V. (NASDAQ:SPNS) was held by Renaissance Technologies, which reported holding $28.2 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $15 million position. Other investors bullish on the company included Navellier & Associates, Noked Capital, and AQR Capital Management. In terms of the portfolio weights assigned to each position Noked Capital allocated the biggest weight to Sapiens International Corporation N.V. (NASDAQ:SPNS), around 0.68% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, designating 0.55 percent of its 13F equity portfolio to SPNS.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Noked Capital, managed by Roy Vermus and Shlomi Bracha, initiated the most valuable position in Sapiens International Corporation N.V. (NASDAQ:SPNS). Noked Capital had $1 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0.9 million position during the quarter. The following funds were also among the new SPNS investors: Donald Sussman’s Paloma Partners, Israel Englander’s Millennium Management, and Greg Eisner’s Engineers Gate Manager.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Sapiens International Corporation N.V. (NASDAQ:SPNS) but similarly valued. These stocks are MAG Silver Corporation (NYSE:MAG), Ligand Pharmaceuticals Inc. (NASDAQ:LGND), CorVel Corporation (NASDAQ:CRVL), GCP Applied Technologies Inc. (NYSE:GCP), Cytokinetics, Inc. (NASDAQ:CYTK), Maxar Technologies Inc (NYSE:MAXR), and Skyline Champion Corporation (NYSE:SKY). All of these stocks’ market caps resemble SPNS’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 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $50 million in SPNS’s case. Cytokinetics, Inc. (NASDAQ:CYTK) is the most popular stock in this table. On the other hand MAG Silver Corporation (NYSE:MAG) is the least popular one with only 10 bullish hedge fund positions. Sapiens International Corporation N.V. (NASDAQ:SPNS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SPNS is 43.1. 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. This is a slightly negative signal and 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 percentage points. These stocks gained 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately SPNS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SPNS investors were disappointed as the stock returned -8.5% since the end of September (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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.