Were Hedge Funds Right About ANSYS, Inc. (ANSS)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards ANSYS, Inc. (NASDAQ:ANSS) and determine whether hedge funds skillfully traded this stock.

Is ANSYS, Inc. (NASDAQ:ANSS) a buy here? Money managers were getting less optimistic. The number of bullish hedge fund bets were cut by 8 lately. ANSYS, Inc. (NASDAQ:ANSS) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 46. Our calculations also showed that ANSS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Charles Akre Akre Capital Management

Charles Akre of Akre Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to take a gander at the recent hedge fund action regarding ANSYS, Inc. (NASDAQ:ANSS).

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

Heading into the fourth quarter of 2021, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. By comparison, 40 hedge funds held shares or bullish call options in ANSS 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.

Is ANSS A Good Stock To Buy?

Among these funds, Impax Asset Management held the most valuable stake in ANSYS, Inc. (NASDAQ:ANSS), which was worth $262.4 million at the end of the third quarter. On the second spot was Akre Capital Management which amassed $207.6 million worth of shares. Echo Street Capital Management, Fundsmith LLP, and Intermede Investment Partners 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 Crestwood Capital Management allocated the biggest weight to ANSYS, Inc. (NASDAQ:ANSS), around 5.23% of its 13F portfolio. Montanaro Asset Management is also relatively very bullish on the stock, designating 4.16 percent of its 13F equity portfolio to ANSS.

Judging by the fact that ANSYS, Inc. (NASDAQ:ANSS) has experienced a decline in interest from hedge fund managers, logic holds that there were a few hedge funds that decided to sell off their full holdings heading into Q4. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest stake of all the hedgies watched by Insider Monkey, worth close to $18 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dumped about $13.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 8 funds heading into Q4.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as ANSYS, Inc. (NASDAQ:ANSS) but similarly valued. These stocks are Fastenal Company (NASDAQ:FAST), ArcelorMittal (NYSE:MT), Ecopetrol S.A. (NYSE:EC), Ball Corporation (NYSE:BLL), Lennar Corporation (NYSE:LEN), Fifth Third Bancorp (NASDAQ:FITB), and Alexandria Real Estate Equities Inc (NYSE:ARE). All of these stocks’ market caps are similar to ANSS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FAST 30 609114 5
MT 20 1012692 -2
EC 6 64885 0
BLL 27 1457074 -17
LEN 50 1706131 0
FITB 28 283754 -13
ARE 26 489883 -2
Average 26.7 803362 -4.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $803 million. That figure was $1493 million in ANSS’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 6 bullish hedge fund positions. ANSYS, Inc. (NASDAQ:ANSS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ANSS is 58.1. 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. 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on ANSS as the stock returned -0.1% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.

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