We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Domo Inc. (NASDAQ:DOMO) based on that data.
Domo Inc. (NASDAQ:DOMO) has seen a decrease in hedge fund interest recently. DOMO was in 15 hedge funds' portfolios at the end of March. There were 18 hedge funds in our database with DOMO positions at the end of the previous quarter. Our calculations also showed that DOMO 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_364863" align="aligncenter" width="398"] David Atterbury of Whetstone Capital Advisors[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. 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. With all of this in mind let's take a look at the recent hedge fund action surrounding Domo Inc. (NASDAQ:DOMO).
How are hedge funds trading Domo Inc. (NASDAQ:DOMO)?
At Q1's end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DOMO over the last 18 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Daniel Patrick Gibson's Sylebra Capital Management has the most valuable position in Domo Inc. (NASDAQ:DOMO), worth close to $26.9 million, corresponding to 1.1% of its total 13F portfolio. The second largest stake is held by Constantinos J. Christofilis of Archon Capital Management, with a $14.5 million position; 5.3% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish contain Dennis Puri and Oliver Keller's Hunt Lane Capital, David Atterbury's Whetstone Capital Advisors and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Archon Capital Management allocated the biggest weight to Domo Inc. (NASDAQ:DOMO), around 5.32% of its 13F portfolio. Hunt Lane Capital is also relatively very bullish on the stock, earmarking 3.22 percent of its 13F equity portfolio to DOMO.
Because Domo Inc. (NASDAQ:DOMO) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of funds that slashed their entire stakes last quarter. At the top of the heap, Dmitry Balyasny's Balyasny Asset Management dumped the biggest investment of the "upper crust" of funds tracked by Insider Monkey, totaling an estimated $11.7 million in stock, and Jack Ripsteen's Potrero Capital Research was right behind this move, as the fund dropped about $4.1 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to Domo Inc. (NASDAQ:DOMO). These stocks are Unity Biotechnology, Inc. (NASDAQ:UBX), Rimini Street, Inc. (NASDAQ:RMNI), Newtek Business Services Corp (NASDAQ:NEWT), and Citizens & Northern Corporation (NASDAQ:CZNC). All of these stocks' market caps match DOMO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UBX,5,2370,-2 RMNI,7,132213,-2 NEWT,8,7880,1 CZNC,2,4939,0 Average,5.5,36851,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $72 million in DOMO's case. Newtek Business Services Corp (NASDAQ:NEWT) is the most popular stock in this table. On the other hand Citizens & Northern Corporation (NASDAQ:CZNC) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Domo Inc. (NASDAQ:DOMO) is more popular among hedge funds. 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 returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on DOMO as the stock returned 218.4% so far in Q2 (through June 25th) 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.
Disclosure: None. This article was originally published at Insider Monkey.