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Hedge Funds Are Coming Back To EPAM Systems Inc (EPAM)

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In this article we will check out the progression of hedge fund sentiment towards EPAM Systems Inc (NYSE:EPAM) 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 EPAM Systems Inc (NYSE:EPAM) an outstanding investment today? The best stock pickers were betting on the stock. The number of bullish hedge fund positions inched up by 9 recently. EPAM Systems Inc (NYSE:EPAM) was in 33 hedge funds' portfolios at the end of June. The all time high for this statistic is 33. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EPAM isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

If you'd ask most shareholders, hedge funds are perceived as slow, outdated financial vehicles of yesteryear. While there are more than 8000 funds with their doors open today, Our experts choose to focus on the top tier of this group, approximately 850 funds. Most estimates calculate that this group of people direct most of the hedge fund industry's total capital, and by tracking their inimitable equity investments, Insider Monkey has unsheathed various investment strategies that have historically beaten Mr. Market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Richard Driehaus of Driehaus Capital

At Insider Monkey, we scour multiple sources to uncover 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 EV 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. Now we're going to go over the new hedge fund action surrounding EPAM Systems Inc (NYSE:EPAM).

Do Hedge Funds Think EPAM Is A Good Stock To Buy Now?

At second quarter's end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EPAM over the last 24 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Millennium Management, managed by Israel Englander, holds the most valuable position in EPAM Systems Inc (NYSE:EPAM). Millennium Management has a $127 million position in the stock, comprising 0.1% of its 13F portfolio. On Millennium Management's heels is Driehaus Capital, managed by Richard Driehaus, which holds a $90.3 million position; 1.2% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Jeremy Hosking's Hosking Partners and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Brasada Capital Management allocated the biggest weight to EPAM Systems Inc (NYSE:EPAM), around 5.32% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, setting aside 1.62 percent of its 13F equity portfolio to EPAM.

Now, key money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, assembled the biggest position in EPAM Systems Inc (NYSE:EPAM). Citadel Investment Group had $40.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also made a $18.5 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw's D E Shaw, Paul Tudor Jones's Tudor Investment Corp, and Qing Li's Sciencast Management.

Let's also examine hedge fund activity in other stocks similar to EPAM Systems Inc (NYSE:EPAM). These stocks are Best Buy Co., Inc. (NYSE:BBY), Equity Residential (NYSE:EQR), CBRE Group, Inc. (NYSE:CBRE), Energy Transfer L.P. (NYSE:ET), Nucor Corporation (NYSE:NUE), Seagen Inc. (NASDAQ:SGEN), and The Kroger Co. (NYSE:KR). This group of stocks' market values are closest to EPAM's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BBY,27,984205,-6 EQR,31,521478,8 CBRE,37,2648713,7 ET,29,835292,4 NUE,32,196463,7 SGEN,37,8709980,-2 KR,39,3562302,4 Average,33.1,2494062,3.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.1 hedge funds with bullish positions and the average amount invested in these stocks was $2494 million. That figure was $523 million in EPAM's case. The Kroger Co. (NYSE:KR) is the most popular stock in this table. On the other hand Best Buy Co., Inc. (NYSE:BBY) is the least popular one with only 27 bullish hedge fund positions. EPAM Systems Inc (NYSE:EPAM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EPAM is 65. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on EPAM as the stock returned 21.1% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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