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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Cloudera, Inc. (NYSE:CLDR).
Is CLDR a good stock to buy? Cloudera, Inc. (NYSE:CLDR) shareholders have witnessed a decrease in support from the world's most elite money managers in recent months. Cloudera, Inc. (NYSE:CLDR) was in 31 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 33. Our calculations also showed that CLDR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Robert G. Moses of RGM Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's take a peek at the fresh hedge fund action surrounding Cloudera, Inc. (NYSE:CLDR).
Do Hedge Funds Think CLDR Is A Good Stock To Buy Now?
At the end of September, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CLDR over the last 21 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.
When looking at the institutional investors followed by Insider Monkey, Icahn Capital LP, managed by Carl Icahn, holds the number one position in Cloudera, Inc. (NYSE:CLDR). Icahn Capital LP has a $569.8 million position in the stock, comprising 3.3% of its 13F portfolio. The second largest stake is held by Robert G. Moses of RGM Capital, with a $93.6 million position; 5.3% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions consist of Ken Griffin's Citadel Investment Group, George McCabe's Portolan Capital Management and Chuck Royce's Royce & Associates. In terms of the portfolio weights assigned to each position RGM Capital allocated the biggest weight to Cloudera, Inc. (NYSE:CLDR), around 5.26% of its 13F portfolio. VIEX Capital Advisors is also relatively very bullish on the stock, earmarking 5.13 percent of its 13F equity portfolio to CLDR.
Because Cloudera, Inc. (NYSE:CLDR) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies that elected to cut their positions entirely heading into Q4. It's worth mentioning that Noam Gottesman's GLG Partners dumped the biggest investment of the "upper crust" of funds followed by Insider Monkey, valued at about $8.9 million in stock, and Renaissance Technologies was right behind this move, as the fund dumped about $5.2 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Cloudera, Inc. (NYSE:CLDR) but similarly valued. These stocks are PS Business Parks Inc (NYSE:PSB), Hudson Pacific Properties Inc (NYSE:HPP), Black Hills Corporation (NYSE:BKH), Inari Medical, Inc. (NASDAQ:NARI), Air Lease Corp (NYSE:AL), Vicor Corp (NASDAQ:VICR), and ASGN Incorporated (NYSE:ASGN). This group of stocks' market caps resemble CLDR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PSB,17,83110,-3 HPP,17,311969,-7 BKH,22,128780,0 NARI,14,105958,-5 AL,20,608764,-2 VICR,20,75016,1 ASGN,21,73967,8 Average,18.7,198223,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $198 million. That figure was $769 million in CLDR's case. Black Hills Corporation (NYSE:BKH) is the most popular stock in this table. On the other hand Inari Medical, Inc. (NASDAQ:NARI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Cloudera, Inc. (NYSE:CLDR) is more popular among hedge funds. Our overall hedge fund sentiment score for CLDR is 81.2. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on CLDR as the stock returned 16.4% since the end of September (through 12/18) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.