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How Did Anaplan, Inc. (PLAN) Compare Against Top Hedge Fund Stocks in 2019?

Reymerlyn Martin

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained more than 57% each. Hedge funds' top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by almost 14 percentage points. That's a big deal. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Anaplan, Inc. (NYSE:PLAN) was in 42 hedge funds' portfolios at the end of the third quarter of 2019. PLAN shareholders have witnessed an increase in hedge fund interest recently. There were 37 hedge funds in our database with PLAN positions at the end of the previous quarter. Our calculations also showed that PLAN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In the 21st century investor’s toolkit there are many metrics stock market investors use to evaluate stocks. Some of the most useful metrics are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top fund managers can beat the market by a very impressive amount (see the details here).

[caption id="attachment_30602" align="aligncenter" width="600"] Philippe Laffont of Coatue Management[/caption]

COATUE MANAGEMENT

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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. Keeping this in mind let's review the new hedge fund action regarding Anaplan, Inc. (NYSE:PLAN).

What have hedge funds been doing with Anaplan, Inc. (NYSE:PLAN)?

Heading into the fourth quarter of 2019, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in PLAN a year ago. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Philippe Laffont's Coatue Management has the biggest position in Anaplan, Inc. (NYSE:PLAN), worth close to $602.2 million, amounting to 5.2% of its total 13F portfolio. The second most bullish fund manager is Melvin Capital Management, managed by Gabriel Plotkin, which holds a $238.9 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish comprise Alex Sacerdote's Whale Rock Capital Management, Daniel Sundheim's D1 Capital Partners and Panayotis Takis Sparaggis's Alkeon Capital Management. In terms of the portfolio weights assigned to each position Berylson Capital Partners allocated the biggest weight to Anaplan, Inc. (NYSE:PLAN), around 9.05% of its 13F portfolio. Kayak Investment Partners is also relatively very bullish on the stock, designating 6.5 percent of its 13F equity portfolio to PLAN.

As industrywide interest jumped, some big names were breaking ground themselves. Whale Rock Capital Management, managed by Alex Sacerdote, established the most outsized position in Anaplan, Inc. (NYSE:PLAN). Whale Rock Capital Management had $180.7 million invested in the company at the end of the quarter. Daniel Sundheim's D1 Capital Partners also initiated a $155.3 million position during the quarter. The other funds with new positions in the stock are Andrew Immerman and Jeremy Schiffman's Palestra Capital Management, Stanley Druckenmiller's Duquesne Capital, and Chase Coleman's Tiger Global Management.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Anaplan, Inc. (NYSE:PLAN) but similarly valued. These stocks are Owl Rock Capital Corporation (NYSE:ORCC), Brixmor Property Group Inc (NYSE:BRX), Healthcare Trust Of America Inc (NYSE:HTA), and Zscaler, Inc. (NASDAQ:ZS). This group of stocks' market caps match PLAN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ORCC,6,141871,6 BRX,16,118738,1 HTA,18,270702,5 ZS,20,133861,-5 Average,15,166293,1.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $2009 million in PLAN's case. Zscaler, Inc. (NASDAQ:ZS) is the most popular stock in this table. On the other hand Owl Rock Capital Corporation (NYSE:ORCC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Anaplan, Inc. (NYSE:PLAN) is more popular among hedge funds. 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 10.1 percentage points. Hedge funds were also right about betting on PLAN as the stock returned 97.4% in 2019 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. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Disclosure: None. This article was originally published at Insider Monkey.

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