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At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Allot Ltd. (NASDAQ:ALLT) makes for a good investment right now.
Allot Ltd. (NASDAQ:ALLT) has seen an increase in hedge fund sentiment of late. Our calculations also showed that ALLT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to go over the latest hedge fund action surrounding Allot Ltd. (NASDAQ:ALLT).
What have hedge funds been doing with Allot Ltd. (NASDAQ:ALLT)?
At Q3's end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards ALLT over the last 17 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.
Among these funds, Lynrock Lake held the most valuable stake in Allot Ltd. (NASDAQ:ALLT), which was worth $40.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $14.5 million worth of shares. Rima Senvest Management, P.A.W. Capital Partners, and Arrowstreet Capital 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 Lynrock Lake allocated the biggest weight to Allot Ltd. (NASDAQ:ALLT), around 5.15% of its 13F portfolio. P.A.W. Capital Partners is also relatively very bullish on the stock, setting aside 4.32 percent of its 13F equity portfolio to ALLT.
Consequently, key hedge funds were leading the bulls' herd. Millennium Management, managed by Israel Englander, created the most outsized position in Allot Ltd. (NASDAQ:ALLT). Millennium Management had $0.1 million invested in the company at the end of the quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Allot Ltd. (NASDAQ:ALLT) but similarly valued. We will take a look at IDT Corporation (NYSE:IDT), Territorial Bancorp Inc (NASDAQ:TBNK), Advanced Emissions Solutions, Inc. (NASDAQ:ADES), and Preformed Line Products Company (NASDAQ:PLPC). This group of stocks' market values are closest to ALLT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IDT,11,39665,-2 TBNK,4,23620,0 ADES,8,42100,0 PLPC,5,30118,0 Average,7,33876,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $64 million in ALLT's case. IDT Corporation (NYSE:IDT) is the most popular stock in this table. On the other hand Territorial Bancorp Inc (NASDAQ:TBNK) is the least popular one with only 4 bullish hedge fund positions. Allot Ltd. (NASDAQ:ALLT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on ALLT, though not to the same extent, as the stock returned 7.9% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.