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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Yext, Inc. (NYSE:YEXT) based on that data.
Is Yext, Inc. (NYSE:YEXT) a buy, sell, or hold? Money managers are selling. The number of bullish hedge fund bets shrunk by 4 in recent months. Our calculations also showed that YEXT 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). YEXT was in 9 hedge funds' portfolios at the end of March. There were 13 hedge funds in our database with YEXT holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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David Atterbury of Whetstone Capital Advisors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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. Keeping this in mind let's analyze the fresh hedge fund action surrounding Yext, Inc. (NYSE:YEXT).
How are hedge funds trading Yext, Inc. (NYSE:YEXT)?
Heading into the second quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -31% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in YEXT a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, D E Shaw held the most valuable stake in Yext, Inc. (NYSE:YEXT), which was worth $7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $4 million worth of shares. Whetstone Capital Advisors, Citadel Investment Group, and Holocene Advisors 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 Whetstone Capital Advisors allocated the biggest weight to Yext, Inc. (NYSE:YEXT), around 1.24% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to YEXT.
Judging by the fact that Yext, Inc. (NYSE:YEXT) has witnessed falling interest from hedge fund managers, we can see that there is a sect of hedgies that elected to cut their positions entirely in the first quarter. At the top of the heap, Bobby Yazdani and Babak Poushanchi's Cota Capital dumped the biggest stake of the "upper crust" of funds followed by Insider Monkey, totaling close to $9.3 million in stock. George McCabe's fund, Portolan Capital Management, also dropped its stock, about $5.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds in the first quarter.
Let's now review hedge fund activity in other stocks similar to Yext, Inc. (NYSE:YEXT). We will take a look at Monmouth Real Estate Investment Corp. (NYSE:MNR), Canada Goose Holdings Inc. (NYSE:GOOS), Banner Corporation (NASDAQ:BANR), and Harmony Gold Mining Company Limited (NYSE:HMY). This group of stocks' market valuations match YEXT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MNR,12,61577,-2 GOOS,26,220589,6 BANR,15,54121,3 HMY,9,39467,-3 Average,15.5,93939,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $18 million in YEXT's case. Canada Goose Holdings Inc. (NYSE:GOOS) is the most popular stock in this table. On the other hand Harmony Gold Mining Company Limited (NYSE:HMY) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Yext, Inc. (NYSE:YEXT) is even less popular than HMY. Hedge funds clearly dropped the ball on YEXT as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on YEXT as the stock returned 64.9% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.