Were Hedge Funds Right About Piling Into ANSYS, Inc. (ANSS)?
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2020. What do these smart investors think about ANSYS, Inc. (NASDAQ:ANSS)?
Hedge fund interest in ANSYS, Inc. (NASDAQ:ANSS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ANSS isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). At the end of this article we will also compare ANSS to other stocks including AFLAC Incorporated (NYSE:AFL), Credit Suisse Group AG (NYSE:CS), and Kinder Morgan Inc (NYSE:KMI) to get a better sense of its popularity.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Charles Akre of Akre Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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 we're going to review the new hedge fund action surrounding ANSYS, Inc. (NASDAQ:ANSS).
Do Hedge Funds Think ANSS Is A Good Stock To Buy Now?
At the end of December, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 33 hedge funds held shares or bullish call options in ANSS a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, Akre Capital Management was the largest shareholder of ANSYS, Inc. (NASDAQ:ANSS), with a stake worth $221.8 million reported as of the end of December. Trailing Akre Capital Management was Impax Asset Management, which amassed a stake valued at $174.6 million. Alkeon Capital Management, Ako Capital, 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 8.53% of its 13F portfolio. Columbus Point is also relatively very bullish on the stock, earmarking 6.83 percent of its 13F equity portfolio to ANSS.
Due to the fact that ANSYS, Inc. (NASDAQ:ANSS) has witnessed falling interest from the smart money, it's easy to see that there were a few fund managers that slashed their full holdings heading into Q1. Intriguingly, Brandon Haley's Holocene Advisors dropped the biggest investment of the 750 funds followed by Insider Monkey, totaling about $72.7 million in stock, and Anna Nikolayevsky's Axel Capital Management was right behind this move, as the fund dropped about $13.1 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to ANSYS, Inc. (NASDAQ:ANSS). We will take a look at AFLAC Incorporated (NYSE:AFL), Credit Suisse Group AG (NYSE:CS), Kinder Morgan Inc (NYSE:KMI), Prudential Financial Inc (NYSE:PRU), Hilton Worldwide Holdings Inc (NYSE:HLT), ResMed Inc. (NYSE:RMD), and Republic Services, Inc. (NYSE:RSG). All of these stocks' market caps resemble ANSS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AFL,35,389034,1 CS,11,46020,-2 KMI,42,1031459,-4 PRU,36,532348,2 HLT,60,6029309,3 RMD,27,355462,-8 RSG,36,1099427,-1 Average,35.3,1354723,-1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.3 hedge funds with bullish positions and the average amount invested in these stocks was $1355 million. That figure was $1633 million in ANSS's case. Hilton Worldwide Holdings Inc (NYSE:HLT) is the most popular stock in this table. On the other hand Credit Suisse Group AG (NYSE:CS) is the least popular one with only 11 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 64.6. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately ANSS wasn't nearly as popular as these 10 stocks and hedge funds that were betting on ANSS were disappointed as the stock returned 0.5% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
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