Will the new coronavirus cause a recession in US in the next 6 months? On February 27th, we put the probability at 75% and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Cyberark Software Ltd (NASDAQ:CYBR).
Cyberark Software Ltd (NASDAQ:CYBR) was in 20 hedge funds' portfolios at the end of the fourth quarter of 2019. CYBR investors should be aware of a decrease in enthusiasm from smart money recently. There were 21 hedge funds in our database with CYBR holdings at the end of the previous quarter. Our calculations also showed that CYBR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the eyes of most market participants, hedge funds are seen as unimportant, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation today, We hone in on the masters of this group, around 850 funds. These money managers oversee bulk of the smart money's total capital, and by observing their finest stock picks, Insider Monkey has determined a few investment strategies that have historically outperformed the market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_26340" align="aligncenter" width="400"] Ken Griffin of Citadel Investment Group[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. With all of this in mind let's take a look at the key hedge fund action surrounding Cyberark Software Ltd (NASDAQ:CYBR).
Hedge fund activity in Cyberark Software Ltd (NASDAQ:CYBR)
At the end of the fourth quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the third quarter of 2019. By comparison, 20 hedge funds held shares or bullish call options in CYBR a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Robert G. Moses's RGM Capital has the number one position in Cyberark Software Ltd (NASDAQ:CYBR), worth close to $93.8 million, accounting for 5.4% of its total 13F portfolio. On RGM Capital's heels is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $47 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain John Overdeck and David Siegel's Two Sigma Advisors, and Clint Carlson's Carlson Capital. In terms of the portfolio weights assigned to each position RGM Capital allocated the biggest weight to Cyberark Software Ltd (NASDAQ:CYBR), around 5.36% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, designating 0.96 percent of its 13F equity portfolio to CYBR.
Because Cyberark Software Ltd (NASDAQ:CYBR) has faced bearish sentiment from hedge fund managers, it's safe to say that there is a sect of fund managers who sold off their positions entirely by the end of the third quarter. Intriguingly, Renaissance Technologies said goodbye to the largest position of all the hedgies followed by Insider Monkey, worth an estimated $26.6 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also sold off its stock, about $4.6 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Cyberark Software Ltd (NASDAQ:CYBR) but similarly valued. These stocks are Lancaster Colony Corporation (NASDAQ:LANC), ACI Worldwide Inc (NASDAQ:ACIW), Enable Midstream Partners LP (NYSE:ENBL), and Nomad Foods Limited Ordinary Shares (NYSE:NOMD). This group of stocks' market values match CYBR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LANC,16,203540,-10 ACIW,20,330169,-1 ENBL,4,38682,-1 NOMD,35,520278,-5 Average,18.75,273167,-4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $273 million. That figure was $210 million in CYBR's case. Nomad Foods Limited Ordinary Shares (NYSE:NOMD) is the most popular stock in this table. On the other hand Enable Midstream Partners LP (NYSE:ENBL) is the least popular one with only 4 bullish hedge fund positions. Cyberark Software Ltd (NASDAQ:CYBR) is not the most popular stock in this group but hedge fund interest is still above average. 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. These stocks lost 17.4% in 2020 through March 25th but still beat the market by 5.5 percentage points. Hedge funds were also right about betting on CYBR, though not to the same extent, as the stock returned -22.7% during the first two and a half months of 2020 (through March 25th) and outperformed the market as well. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.