In this article we will check out the progression of hedge fund sentiment towards Altair Engineering Inc. (NASDAQ:ALTR) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ 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 ALTR a good stock to buy now? Altair Engineering Inc. (NASDAQ:ALTR) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that ALTR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare ALTR to other stocks including The Ensign Group, Inc. (NASDAQ:ENSG), Millicom International Cellular S.A. (NASDAQ:TIGO), and Artisan Partners Asset Management Inc (NYSE:APAM) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are many formulas stock traders employ to size up their holdings. Some of the less utilized formulas are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top fund managers can outpace the S&P 500 by a very impressive amount (see the details here).
Michael Gelband of ExodusPoint Capital
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 15 best blue chip stocks 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 daily newsletter on our website. Keeping this in mind we're going to view the recent hedge fund action surrounding Altair Engineering Inc. (NASDAQ:ALTR).
Do Hedge Funds Think ALTR Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ALTR over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, David Goel and Paul Ferri's Matrix Capital Management has the largest position in Altair Engineering Inc. (NASDAQ:ALTR), worth close to $173.7 million, comprising 2.3% of its total 13F portfolio. The second largest stake is held by Impax Asset Management, managed by Ian Simm, which holds a $93.7 million position; 0.8% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions consist of Panayotis Takis Sparaggis's Alkeon Capital Management, Panayotis Takis Sparaggis's Alkeon Capital Management and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Matrix Capital Management allocated the biggest weight to Altair Engineering Inc. (NASDAQ:ALTR), around 2.31% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, designating 0.82 percent of its 13F equity portfolio to ALTR.
Because Altair Engineering Inc. (NASDAQ:ALTR) has witnessed a decline in interest from the entirety of the hedge funds we track, it's safe to say that there were a few hedgies who were dropping their positions entirely heading into Q4. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital cut the largest position of the 750 funds monitored by Insider Monkey, totaling an estimated $2.6 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also said goodbye to its stock, about $1.5 million worth. These transactions are intriguing to say the least, 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 Altair Engineering Inc. (NASDAQ:ALTR). These stocks are The Ensign Group, Inc. (NASDAQ:ENSG), Millicom International Cellular S.A. (NASDAQ:TIGO), Artisan Partners Asset Management Inc (NYSE:APAM), Glacier Bancorp, Inc. (NASDAQ:GBCI), Popular Inc (NASDAQ:BPOP), ACI Worldwide Inc (NASDAQ:ACIW), and RBC Bearings Incorporated (NASDAQ:ROLL). This group of stocks' market caps are closest to ALTR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ENSG,19,65398,0 TIGO,8,60122,0 APAM,26,271017,5 GBCI,21,53874,1 BPOP,30,554530,-3 ACIW,29,429393,7 ROLL,18,51655,1 Average,21.6,212284,1.6 [/table]
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $212 million. That figure was $324 million in ALTR's case. Popular Inc (NASDAQ:BPOP) is the most popular stock in this table. On the other hand Millicom International Cellular S.A. (NASDAQ:TIGO) is the least popular one with only 8 bullish hedge fund positions. Altair Engineering Inc. (NASDAQ:ALTR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ALTR is 42. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on ALTR as the stock returned 31.2% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
