Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Bill.com Holdings, Inc. (NYSE:BILL)? The smart money sentiment can provide an answer to this question.
Is BILL stock a buy or sell? Bill.com Holdings, Inc. (NYSE:BILL) was in 52 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 52. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. BILL shareholders have witnessed an increase in hedge fund interest lately. There were 44 hedge funds in our database with BILL holdings at the end of September. Our calculations also showed that BILL isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 percentage points since March 2017 (see the details here).
Colin Moran of Abdiel Capital Advisors
At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 (or at the end of this article). Now we're going to take a glance at the latest hedge fund action encompassing Bill.com Holdings, Inc. (NYSE:BILL).
Do Hedge Funds Think BILL Is A Good Stock To Buy Now?
At the end of December, a total of 52 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the previous quarter. On the other hand, there were a total of 32 hedge funds with a bullish position in BILL a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Bill.com Holdings, Inc. (NYSE:BILL) was held by Whale Rock Capital Management, which reported holding $479.5 million worth of stock at the end of December. It was followed by Lone Pine Capital with a $377.9 million position. Other investors bullish on the company included Abdiel Capital Advisors, Tybourne Capital Management, and Point State Capital. In terms of the portfolio weights assigned to each position 3G Capital allocated the biggest weight to Bill.com Holdings, Inc. (NYSE:BILL), around 16.05% of its 13F portfolio. Andar Capital is also relatively very bullish on the stock, dishing out 9.8 percent of its 13F equity portfolio to BILL.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Tybourne Capital Management, managed by Eashwar Krishnan, initiated the most outsized position in Bill.com Holdings, Inc. (NYSE:BILL). Tybourne Capital Management had $175.8 million invested in the company at the end of the quarter. Aaron Cowen's Suvretta Capital Management also made a $55.7 million investment in the stock during the quarter. The following funds were also among the new BILL investors: Israel Englander's Millennium Management, Amir Mokari's Emerson Point Capital, and Wen Han Li's Andar Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Bill.com Holdings, Inc. (NYSE:BILL) but similarly valued. We will take a look at Textron Inc. (NYSE:TXT), Mirati Therapeutics, Inc. (NASDAQ:MRTX), Bentley Systems, Incorporated (NASDAQ:BSY), Centrais Elétricas Brasileiras S.A. - Eletrobrás (NYSE:EBR), CRISPR Therapeutics AG (NASDAQ:CRSP), XPO Logistics Inc (NYSE:XPO), and F5 Networks, Inc. (NASDAQ:FFIV). All of these stocks' market caps resemble BILL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TXT,23,589474,0 MRTX,56,3610322,18 BSY,19,82011,0 EBR,6,4239,2 CRSP,34,2010222,8 XPO,40,2981368,1 FFIV,34,1131637,-2 Average,30.3,1487039,3.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $1487 million. That figure was $1994 million in BILL's case. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is the most popular stock in this table. On the other hand Centrais Elétricas Brasileiras S.A. - Eletrobrás (NYSE:EBR) is the least popular one with only 6 bullish hedge fund positions. Bill.com Holdings, Inc. (NYSE:BILL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BILL is 86. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on BILL as the stock returned 7.2% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Get real-time email alerts: Follow Bill.com Holdings Inc. (NYSE:BILL)
Disclosure: None. This article was originally published at Insider Monkey.