We at Insider Monkey have gone over 752 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 September 30th. In this article, we look at what those funds think of Atlassian Corporation Plc (NASDAQ:TEAM) based on that data.
Is Atlassian Corporation Plc (NASDAQ:TEAM) a safe investment now? The smart money is taking an optimistic view. The number of long hedge fund positions rose by 10 in recent months. Our calculations also showed that TEAM isn't among the 30 most popular stocks among hedge funds. TEAM was in 46 hedge funds' portfolios at the end of September. There were 36 hedge funds in our database with TEAM holdings at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_670980" align="aligncenter" width="600"] Gabriel Plotkin of Melvin Capital Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a gander at the key hedge fund action encompassing Atlassian Corporation Plc (NASDAQ:TEAM).
How have hedgies been trading Atlassian Corporation Plc (NASDAQ:TEAM)?
At Q3's end, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in TEAM a year ago. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Atlassian Corporation Plc (NASDAQ:TEAM), with a stake worth $683.9 million reported as of the end of September. Trailing Renaissance Technologies was Lone Pine Capital, which amassed a stake valued at $261.1 million. Citadel Investment Group, Tybourne Capital Management, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Strategy Capital allocated the biggest weight to Atlassian Corporation Plc (NASDAQ:TEAM), around 16.69% of its portfolio. Center Lake Capital is also relatively very bullish on the stock, designating 7.92 percent of its 13F equity portfolio to TEAM.
Now, key money managers were breaking ground themselves. Melvin Capital Management, managed by Gabriel Plotkin, initiated the largest position in Atlassian Corporation Plc (NASDAQ:TEAM). Melvin Capital Management had $40.8 million invested in the company at the end of the quarter. Michel Massoud's Melqart Asset Management also made a $13.4 million investment in the stock during the quarter. The following funds were also among the new TEAM investors: Louis Bacon's Moore Global Investments, Gregg Moskowitz's Interval Partners, and Matthew Hulsizer's PEAK6 Capital Management.
Let's check out hedge fund activity in other stocks similar to Atlassian Corporation Plc (NASDAQ:TEAM). We will take a look at AvalonBay Communities Inc (NYSE:AVB), WEC Energy Group, Inc. (NYSE:WEC), LyondellBasell Industries NV (NYSE:LYB), and Carnival Corporation & plc (NYSE:CUK). All of these stocks' market caps resemble TEAM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVB,19,537344,-2 WEC,19,383786,6 LYB,31,502464,-14 CUK,11,142543,1 Average,20,391534,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $392 million. That figure was $2413 million in TEAM's case. LyondellBasell Industries NV (NYSE:LYB) is the most popular stock in this table. On the other hand Carnival Corporation & plc (NYSE:CUK) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Atlassian Corporation Plc (NASDAQ:TEAM) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately TEAM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TEAM were disappointed as the stock returned 0.4% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.