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

During the fourth quarter the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by nearly 7 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of ANSYS, Inc. (NASDAQ:ANSS) and see how the stock is affected by the recent hedge fund activity.

Is ANSYS, Inc. (NASDAQ:ANSS) a buy right now? Investors who are in the know are turning bullish. The number of bullish hedge fund bets improved by 3 in recent months. Our calculations also showed that ANSS isn’t among the 30 most popular stocks among hedge funds. ANSS was in 29 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 26 hedge funds in our database with ANSS positions at the end of the previous quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Steven Cohen

We’re going to analyze the latest hedge fund action encompassing ANSYS, Inc. (NASDAQ:ANSS).

How are hedge funds trading ANSYS, Inc. (NASDAQ:ANSS)?

At Q4’s end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from the second quarter of 2018. By comparison, 27 hedge funds held shares or bullish call options in ANSS a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

ANSS_mar2019

Among these funds, Select Equity Group held the most valuable stake in ANSYS, Inc. (NASDAQ:ANSS), which was worth $285.3 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $71.8 million worth of shares. Moreover, Polar Capital, AQR Capital Management, and Echo Street Capital Management were also bullish on ANSYS, Inc. (NASDAQ:ANSS), allocating a large percentage of their portfolios to this stock.

As aggregate interest increased, key money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, initiated the biggest position in ANSYS, Inc. (NASDAQ:ANSS). Point72 Asset Management had $22 million invested in the company at the end of the quarter. Michael R. Weisberg’s Crestwood Capital Management also made a $7 million investment in the stock during the quarter. The following funds were also among the new ANSS investors: George Baxter’s Sabrepoint Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ANSYS, Inc. (NASDAQ:ANSS) but similarly valued. These stocks are Marathon Oil Corporation (NYSE:MRO), Skyworks Solutions Inc (NASDAQ:SWKS), Match Group, Inc. (NASDAQ:MTCH), and Hologic, Inc. (NASDAQ:HOLX). This group of stocks’ market values match ANSS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MRO 37 746125 -2
SWKS 32 666763 7
MTCH 24 295721 -5
HOLX 28 803211 6
Average 30.25 627955 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.25 hedge funds with bullish positions and the average amount invested in these stocks was $628 million. That figure was $734 million in ANSS’s case. Marathon Oil Corporation (NYSE:MRO) is the most popular stock in this table. On the other hand Match Group, Inc. (NASDAQ:MTCH) is the least popular one with only 24 bullish hedge fund positions. ANSYS, Inc. (NASDAQ:ANSS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on ANSS as the stock returned 26.1% and outperformed the market as well. You can see the entire list of these shrewd hedge funds here.

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

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