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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Sprout Social, Inc. (NASDAQ:SPT) and determine whether the smart money was really smart about this stock.
Sprout Social, Inc. (NASDAQ:SPT) was in 19 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. SPT has experienced an increase in activity from the world's largest hedge funds in recent months. There were 16 hedge funds in our database with SPT holdings at the end of March. Our calculations also showed that SPT isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
At the moment there are numerous signals shareholders use to evaluate stocks. A duo of the most under-the-radar signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best investment managers can beat their index-focused peers by a solid amount (see the details here).
Israel Englander of Millennium Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Now we're going to take a look at the recent hedge fund action regarding Sprout Social, Inc. (NASDAQ:SPT).
What have hedge funds been doing with Sprout Social, Inc. (NASDAQ:SPT)?
At the end of the second quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SPT over the last 20 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in Sprout Social, Inc. (NASDAQ:SPT) was held by Hunt Lane Capital, which reported holding $32.4 million worth of stock at the end of September. It was followed by Greenspring Associates with a $29.7 million position. Other investors bullish on the company included General Equity Partners, Millennium Management, and Night Owl Capital Management. In terms of the portfolio weights assigned to each position Greenspring Associates allocated the biggest weight to Sprout Social, Inc. (NASDAQ:SPT), around 18.25% of its 13F portfolio. General Equity Partners is also relatively very bullish on the stock, dishing out 17.71 percent of its 13F equity portfolio to SPT.
As aggregate interest increased, some big names were breaking ground themselves. Night Owl Capital Management, managed by John Kim, assembled the most valuable position in Sprout Social, Inc. (NASDAQ:SPT). Night Owl Capital Management had $6.3 million invested in the company at the end of the quarter. Ian Simm's Impax Asset Management also made a $1.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Michael Gelband's ExodusPoint Capital, and Robert Joseph Caruso's Select Equity Group.
Let's go over hedge fund activity in other stocks similar to Sprout Social, Inc. (NASDAQ:SPT). We will take a look at BRP Group, Inc. (NASDAQ:BRP), Cinemark Holdings, Inc. (NYSE:CNK), Nova Measuring Instruments Ltd. (NASDAQ:NVMI), GCP Applied Technologies Inc. (NYSE:GCP), Bed Bath & Beyond Inc. (NASDAQ:BBBY), Weis Markets, Inc. (NYSE:WMK), and NGM Biopharmaceuticals, Inc. (NASDAQ:NGM). This group of stocks' market caps resemble SPT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRP,16,58478,14 CNK,24,250982,-3 NVMI,13,214290,3 GCP,21,341512,9 BBBY,33,351185,5 WMK,19,51204,7 NGM,12,106170,0 Average,19.7,196260,5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.7 hedge funds with bullish positions and the average amount invested in these stocks was $196 million. That figure was $130 million in SPT's case. Bed Bath & Beyond Inc. (NASDAQ:BBBY) is the most popular stock in this table. On the other hand NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) is the least popular one with only 12 bullish hedge fund positions. Sprout Social, Inc. (NASDAQ:SPT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SPT is 54.7. 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 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on SPT as the stock returned 42.6% in the third quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.