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 initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) changed recently.
Is SSNC a good stock to buy? SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) was in 54 hedge funds’ portfolios at the end of March. The all time high for this statistic is 65. SSNC has experienced an increase in activity from the world’s largest hedge funds lately. There were 49 hedge funds in our database with SSNC holdings at the end of December. Our calculations also showed that SSNC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). 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, an activist hedge fund wants to buy this $29 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to view the new hedge fund action surrounding SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).
Do Hedge Funds Think SSNC Is A Good Stock To Buy Now?
At the end of March, a total of 54 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in SSNC over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) was held by Select Equity Group, which reported holding $814.5 million worth of stock at the end of December. It was followed by Alkeon Capital Management with a $336.7 million position. Other investors bullish on the company included Cantillon Capital Management, Baupost Group, and Eminence Capital. In terms of the portfolio weights assigned to each position Blacksheep Fund Management allocated the biggest weight to SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), around 14.53% of its 13F portfolio. Guardian Point Capital is also relatively very bullish on the stock, dishing out 9.64 percent of its 13F equity portfolio to SSNC.
As aggregate interest increased, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the most outsized position in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC). Marshall Wace LLP had $65.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $35 million investment in the stock during the quarter. The following funds were also among the new SSNC investors: Mikal Patel’s Oribel Capital Management, Renaissance Technologies, and Mikal Patel’s Oribel Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) but similarly valued. These stocks are Catalent Inc (NYSE:CTLT), The AES Corporation (NYSE:AES), Incyte Corporation (NASDAQ:INCY), Cardinal Health, Inc. (NYSE:CAH), Huazhu Group Limited (NASDAQ:HTHT), J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), and Imperial Oil Limited (NYSE:IMO). This group of stocks’ market valuations match SSNC’s market valuation.
|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 30.4 hedge funds with bullish positions and the average amount invested in these stocks was $1210 million. That figure was $2671 million in SSNC’s case. The AES Corporation (NYSE:AES) is the most popular stock in this table. On the other hand Imperial Oil Limited (NYSE:IMO) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is more popular among hedge funds. Our overall hedge fund sentiment score for SSNC is 84.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Unfortunately SSNC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SSNC were disappointed as the stock returned 6% since the end of the first quarter (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Disclosure: None. This article was originally published at Insider Monkey.