Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Ebix Inc (NASDAQ:EBIX).
Ebix Inc (NASDAQ:EBIX) was in 15 hedge funds' portfolios at the end of the first quarter of 2020. EBIX investors should pay attention to a decrease in activity from the world's largest hedge funds recently. There were 19 hedge funds in our database with EBIX holdings at the end of the previous quarter. Our calculations also showed that EBIX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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. 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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
TUDOR INVESTMENT CORP
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's check out the latest hedge fund action surrounding Ebix Inc (NASDAQ:EBIX).
How have hedgies been trading Ebix Inc (NASDAQ:EBIX)?
Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EBIX over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is EBIX A Good Stock To Buy?
When looking at the institutional investors followed by Insider Monkey, P2 Capital Partners, managed by Claus Moller, holds the largest position in Ebix Inc (NASDAQ:EBIX). P2 Capital Partners has a $19 million position in the stock, comprising 2.3% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $5.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that are bullish comprise Chuck Royce's Royce & Associates, Ken Griffin's Citadel Investment Group and George McCabe's Portolan Capital Management. In terms of the portfolio weights assigned to each position P2 Capital Partners allocated the biggest weight to Ebix Inc (NASDAQ:EBIX), around 2.27% of its 13F portfolio. Trellus Management Company is also relatively very bullish on the stock, dishing out 2.04 percent of its 13F equity portfolio to EBIX.
Since Ebix Inc (NASDAQ:EBIX) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of fund managers that slashed their entire stakes in the first quarter. Intriguingly, Paul Tudor Jones's Tudor Investment Corp dumped the largest investment of all the hedgies monitored by Insider Monkey, worth about $1.1 million in stock. Brandon Haley's fund, Holocene Advisors, also said goodbye to its stock, about $0.7 million worth. These transactions are interesting, as total hedge fund interest was cut by 4 funds in the first quarter.
Let's check out hedge fund activity in other stocks similar to Ebix Inc (NASDAQ:EBIX). These stocks are Nexa Resources S.A. (NYSE:NEXA), Sinovac Biotech Ltd. (NASDAQ:SVA), Peoples Bancorp Inc. (NASDAQ:PEBO), and Evolent Health Inc (NYSE:EVH). This group of stocks' market valuations are similar to EBIX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NEXA,4,2109,-1 SVA,3,56861,-1 PEBO,11,19179,0 EVH,13,33227,-3 Average,7.75,27844,-1.25 [/table]
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $45 million in EBIX's case. Evolent Health Inc (NYSE:EVH) is the most popular stock in this table. On the other hand Sinovac Biotech Ltd. (NASDAQ:SVA) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Ebix Inc (NASDAQ:EBIX) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on EBIX as the stock returned 44.6% so far in Q2 (through June 25th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
