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What Does Smart Money Sentiment Says About Simulations Plus, Inc. (SLP)?

Is Simulations Plus, Inc. (NASDAQ:SLP) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Simulations Plus, Inc. (NASDAQ:SLP) undervalued? Investors who are in the know are taking a bullish view. The number of long hedge fund bets increased by 1 lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Horizon Global Corp (NYSE:HZN), Civeo Corporation (Canada) (NYSE:CVEO), and Stemline Therapeutics Inc (NASDAQ:STML) to gather more data points.

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To the average investor there are numerous metrics market participants can use to grade stocks. A pair of the less known metrics are hedge fund and insider trading signals. Experts at Insider Monkey, a website specializing in hedge funds, have shown that, historically, those who follow the best picks of the elite fund managers can trounce the broader indices by a solid margin (see the details here).

Keeping this in mind, we’re going to analyze the new action regarding Simulations Plus, Inc. (NASDAQ:SLP).

How are hedge funds trading Simulations Plus, Inc. (NASDAQ:SLP)?

Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey were bullish in this stock, an increase of 33% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Simulations Plus, Inc. (NASDAQ:SLP). Renaissance Technologies has a $4.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Cove Street Capital, managed by Jeffrey Bronchick, which held a $1.4 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other peers that are bullish encompass Charles Paquelet’s Skylands Capital, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s also review hedge fund activity in other stocks similar to Simulations Plus, Inc. (NASDAQ:SLP). These stocks are Horizon Global Corp (NYSE:HZN), Civeo Corporation (Canada) (NYSE:CVEO), Stemline Therapeutics Inc (NASDAQ:STML), and Amira Nature Foods Ltd (NYSE:ANFI). This group of stocks’ market values are similar to Simulations Plus, Inc. (NASDAQ:SLP)’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HZN 14 45264 14
CVEO 15 33940 -6
STML 8 20373 -3
ANFI 4 1442 -3

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. Civeo Corporation (Canada) (NYSE:CVEO) is the most popular stock in this table. On the other hand, Amira Nature Foods Ltd (NYSE:ANFI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Simulations Plus, Inc. (NASDAQ:SLP) is even less popular than Amira Nature Foods Ltd (NYSE:ANFI), which may suggest that smart money are not very fond of the company. A more detailed analysis might reveal whether hedge funds are right, but it’s better to examine stocks in which large investors are more confident in, such as Civeo Corporation or Horizon Global Corp.

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