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In this article we are going to use hedge fund sentiment as a tool and determine whether Akamai Technologies, Inc. (NASDAQ:AKAM) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Akamai Technologies, Inc. (NASDAQ:AKAM) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 30 hedge funds' portfolios at the end of the third quarter of 2021. Our calculations also showed that AKAM isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as PagSeguro Digital Ltd. (NYSE:PAGS), Continental Resources, Inc. (NYSE:CLR), and Wheaton Precious Metals Corp. (NYSE:WPM) to gather more data points.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let's take a look at the recent hedge fund action encompassing Akamai Technologies, Inc. (NASDAQ:AKAM).
Alex Litowitz of Magnetar Capital
Do Hedge Funds Think AKAM Is A Good Stock To Buy Now?
At the end of September, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in AKAM over the last 25 quarters. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Akamai Technologies, Inc. (NASDAQ:AKAM), which was worth $84.8 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $50.9 million worth of shares. Alyeska Investment Group, D E Shaw, and Millennium Management 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 Skylands Capital allocated the biggest weight to Akamai Technologies, Inc. (NASDAQ:AKAM), around 0.58% of its 13F portfolio. Alyeska Investment Group is also relatively very bullish on the stock, setting aside 0.52 percent of its 13F equity portfolio to AKAM.
Since Akamai Technologies, Inc. (NASDAQ:AKAM) has faced a decline in interest from the entirety of the hedge funds we track, it's easy to see that there lies a certain "tier" of hedge funds who sold off their entire stakes last quarter. At the top of the heap, Israel Englander's Millennium Management cut the biggest position of the 750 funds monitored by Insider Monkey, totaling close to $4.1 million in stock. D. E. Shaw's fund, D E Shaw, also dropped its stock, about $3.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Akamai Technologies, Inc. (NASDAQ:AKAM). These stocks are PagSeguro Digital Ltd. (NYSE:PAGS), Continental Resources, Inc. (NYSE:CLR), Wheaton Precious Metals Corp. (NYSE:WPM), Boston Properties, Inc. (NYSE:BXP), ASE Technology Holding Co., Ltd. (NYSE:ASX), The Carlyle Group Inc (NASDAQ:CG), and Ceridian HCM Holding Inc. (NYSE:CDAY). This group of stocks' market values are similar to AKAM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PAGS,41,2446922,1 CLR,24,166253,1 WPM,27,347520,1 BXP,21,1471101,2 ASX,10,271536,3 CG,34,1401572,13 CDAY,20,1798355,-5 Average,25.3,1129037,2.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $1129 million. That figure was $328 million in AKAM's case. PagSeguro Digital Ltd. (NYSE:PAGS) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 10 bullish hedge fund positions. Akamai Technologies, Inc. (NASDAQ:AKAM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AKAM is 59.8. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on AKAM as the stock returned 7.8% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.