Was The Smart Money Right About SS&C Technologies Holdings, Inc. (SSNC)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).

SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) has seen a decrease in hedge fund interest lately. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) was in 49 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 65. There were 54 hedge funds in our database with SSNC holdings at the end of March. Our calculations also showed that SSNC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are tons of metrics market participants have at their disposal to grade their holdings. A couple of the most useful metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best money managers can outclass the S&P 500 by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. We go through lists like the 10 best EV 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 let’s review the recent hedge fund action surrounding SS&C Technologies Holdings, Inc. (NASDAQ:SSNC).

Do Hedge Funds Think SSNC Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 49 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 65 hedge funds with a bullish position in SSNC 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.

Among these funds, Select Equity Group held the most valuable stake in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), which was worth $697 million at the end of the second quarter. On the second spot was Alkeon Capital Management which amassed $374.5 million worth of shares. Cantillon Capital Management, Baupost Group, and Southpoint 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 Blacksheep Fund Management allocated the biggest weight to SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), around 11.56% of its 13F portfolio. Sunriver Management is also relatively very bullish on the stock, setting aside 9.9 percent of its 13F equity portfolio to SSNC.

Seeing as SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds that slashed their entire stakes in the second quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP dropped the biggest position of all the hedgies tracked by Insider Monkey, comprising an estimated $65.1 million in stock. Leon Lowenstein’s fund, Lionstone Capital Management, also dropped its stock, about $13.5 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 5 funds in the second quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) but similarly valued. We will take a look at Tyler Technologies, Inc. (NYSE:TYL), Catalent Inc (NYSE:CTLT), Pool Corporation (NASDAQ:POOL), PagSeguro Digital Ltd. (NYSE:PAGS), Genuine Parts Company (NYSE:GPC), NetApp Inc. (NASDAQ:NTAP), and Domino’s Pizza, Inc. (NYSE:DPZ). This group of stocks’ market valuations resemble SSNC’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.9 hedge funds with bullish positions and the average amount invested in these stocks was $1196 million. That figure was $2569 million in SSNC’s case. Catalent Inc (NYSE:CTLT) is the most popular stock in this table. On the other hand Genuine Parts Company (NYSE:GPC) is the least popular one with only 29 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 72.6. 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 returned 29.6% in 2021 through November 5th but still managed to beat the market by 3.1 percentage points. Hedge funds were also right about betting on SSNC as the stock returned 8.2% since the end of June (through 11/5) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.