The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Net 1 UEPS Technologies Inc (NASDAQ:UEPS).
Is UEPS a good stock to buy now? Net 1 UEPS Technologies Inc (NASDAQ:UEPS) has experienced a decrease in hedge fund interest in recent months. Net 1 UEPS Technologies Inc (NASDAQ:UEPS) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 22. Our calculations also showed that UEPS 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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. Keeping this in mind let’s take a glance at the key hedge fund action surrounding Net 1 UEPS Technologies Inc (NASDAQ:UEPS).
Do Hedge Funds Think UEPS Is A Good Stock To Buy Now?
At third quarter’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in UEPS a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Prescott Group Capital Management was the largest shareholder of Net 1 UEPS Technologies Inc (NASDAQ:UEPS), with a stake worth $8.5 million reported as of the end of September. Trailing Prescott Group Capital Management was Rubric Capital Management, which amassed a stake valued at $7.2 million. International Value Advisers, D E Shaw, and VIEX Capital Advisors 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 Fondren Management allocated the biggest weight to Net 1 UEPS Technologies Inc (NASDAQ:UEPS), around 12.84% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, dishing out 3.78 percent of its 13F equity portfolio to UEPS.
Because Net 1 UEPS Technologies Inc (NASDAQ:UEPS) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds who sold off their full holdings heading into Q4. At the top of the heap, Noah Levy and Eugene Dozortsev’s Newtyn Management dropped the biggest investment of the 750 funds watched by Insider Monkey, comprising close to $1 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $0.6 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Net 1 UEPS Technologies Inc (NASDAQ:UEPS). We will take a look at Summit Financial Group, Inc. (NASDAQ:SMMF), Evofem Biosciences, Inc. (NASDAQ:EVFM), Callon Petroleum Company (NYSE:CPE), RGC Resources, Inc. (NASDAQ:RGCO), MVB Financial Corp. (NASDAQ:MVBF), General Finance Corporation (NASDAQ:GFN), and Atlanticus Holdings Corp (NASDAQ:ATLC). All of these stocks’ market caps match UEPS’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 3.9 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $30 million in UEPS’s case. Evofem Biosciences, Inc. (NASDAQ:EVFM) is the most popular stock in this table. On the other hand RGC Resources, Inc. (NASDAQ:RGCO) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Net 1 UEPS Technologies Inc (NASDAQ:UEPS) is more popular among hedge funds. Our overall hedge fund sentiment score for UEPS is 71.7. 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. Unfortunately UEPS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on UEPS were disappointed as the stock returned 0.6% 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 in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.