SPS Commerce, Inc. (SPSC): Are Hedge Funds Right About This Stock?

Because SPS Commerce, Inc. (NASDAQ:SPSC) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedge funds who were dropping their entire stakes heading into Q4. It’s worth mentioning that Paul Singer’s Elliott Management dumped the largest investment of the “upper crust” of funds studied by Insider Monkey, comprising an estimated $12.4 million in stock. Bruce Garelick’s fund, Garelick Capital Partners, also said goodbye to its stock, about $5.3 million worth.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SPS Commerce, Inc. (NASDAQ:SPSC) but similarly valued. These stocks are Cynosure, Inc. (NASDAQ:CYNO), McDermott International (NYSE:MDR), Seadrill Ltd (NYSE:SDRL), and Inogen Inc (NASDAQ:INGN). This group of stocks’ market valuations resemble SPSC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CYNO 24 166744 -1
MDR 25 109182 1
SDRL 18 33658 1
INGN 10 63654 -5

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $63 million in SPSC’s case. McDermott International (NYSE:MDR) is the most popular stock in this table. On the other hand Inogen Inc (NASDAQ:INGN) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks SPS Commerce, Inc. (NASDAQ:SPSC) is even less popular than INGN. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None