Coronavirus is probably the #1 concern in investors' minds right now. It should be. On February 27th we published this article and predicted that US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Anaplan, Inc. (NYSE:PLAN) based on those filings.
Anaplan, Inc. (NYSE:PLAN) investors should pay attention to an increase in enthusiasm from smart money lately. PLAN was in 57 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 44 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 Q4 rankings and see the video below for Q3 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_30602" align="aligncenter" width="399"] Philippe Laffont of Coatue Management[/caption]
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, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Keeping this in mind let's take a glance at the recent hedge fund action regarding Anaplan, Inc. (NYSE:PLAN).
What does smart money think about Anaplan, Inc. (NYSE:PLAN)?
At the end of the fourth quarter, a total of 57 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PLAN over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Anaplan, Inc. (NYSE:PLAN) was held by Coatue Management, which reported holding $477.2 million worth of stock at the end of September. It was followed by Melvin Capital Management with a $316.3 million position. Other investors bullish on the company included D1 Capital Partners, Alkeon Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Kayak Investment Partners allocated the biggest weight to Anaplan, Inc. (NYSE:PLAN), around 7.88% of its 13F portfolio. Berylson Capital Partners is also relatively very bullish on the stock, earmarking 4.85 percent of its 13F equity portfolio to PLAN.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. OZ Management, managed by Daniel S. Och, initiated the most valuable position in Anaplan, Inc. (NYSE:PLAN). OZ Management had $57.4 million invested in the company at the end of the quarter. Andreas Halvorsen's Viking Global also made a $54.7 million investment in the stock during the quarter. The following funds were also among the new PLAN investors: Mick Hellman's HMI Capital, Anthony Joseph Vaccarino's North Fourth Asset Management, and Matthew Knauer and Mina Faltas's Nokota Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Anaplan, Inc. (NYSE:PLAN) but similarly valued. These stocks are FLIR Systems, Inc. (NASDAQ:FLIR), Momo Inc (NASDAQ:MOMO), Owl Rock Capital Corporation (NYSE:ORCC), and WABCO Holdings Inc. (NYSE:WBC). This group of stocks' market values are closest to PLAN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FLIR,32,202619,7 MOMO,38,917767,11 ORCC,8,159825,2 WBC,34,1206287,2 Average,28,621625,5.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $622 million. That figure was $2188 million in PLAN's case. Momo Inc (NASDAQ:MOMO) 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 8 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. These stocks lost 12.9% in 2020 through March 9th and still beat the market by 1.9 percentage points. Unfortunately PLAN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on PLAN were disappointed as the stock returned -28.2% during the first two months of 2020 (through March 9th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.