Cooper Investors recently released its Q3 2020 Investor Letter, a copy of which you can download here. During the third quarter of 2020, the fund returned 9.18%, while the benchmark MSCI ACWI was up 6.94%. You should check out Cooper Investors top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In the said letter, Cooper Investors highlighted a few stocks and Paycom Software Inc. (NYSE:PAYC) is one of them. Paycom Software Inc. (NYSE:PAYC) is an online payroll and human resource technology provider. Year-to-date, Paycom Software Inc. (NYSE:PAYC) stock gained 46.3% and on October 19th it had a closing price of $383.12. Here is what Cooper Investors said:
“In the midst of the technology pull back in September the Fund bought a position in Paycom, a leading Software-as-a-Service [‘SAAS’] provider of payroll and human capital management [‘HCM’] solutions in the US. Founded by CEO Chad Richison in 1998 and based in Oklahoma City, Paycom has built one of the highest quality SAAS businesses we’ve come across, growing its revenues at a rate of 30% with 40% EBITDA margins.
Paycom has a differentiated product with a fully integrated all-in-one HCM and payroll offering. In a Cloud and remote-working world the ability to access all needs such as payroll, recruitment and learning management through a single application and database is a huge advantage versus the incumbent solution which often involves the complexity of multiple vendors.
Paycom has faced headwinds in 2020 notably the decrease in employment which impacts revenues as the business charges based on employee headcount. When the Fund purchased shares Paycom stock had been flat for 2020 despite the strong performance of technology stocks, a brief opportunity when considering Paycom still looks likely to grow its revenues double digits in 2020. We think Paycom can get back to its formerly very strong growth rates given a unique offering and US$800mn revenue base in a US$30bn+ addressable market that is growing mid-to-high single digits.”
In Q2 2020, the number of bullish hedge fund positions on Paycom Software Inc. (NYSE:PAYC) stock increased by about 20% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Paycom’s growth potential. Our calculations showed that Paycom Software Inc. (NYSE:PAYC) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 enewsletter below to receive our stories in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.