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 Cloudera, Inc. (NYSE:CLDR) and determine whether the smart money was really smart about this stock.
Cloudera, Inc. (NYSE:CLDR) has seen an increase in hedge fund sentiment lately. Cloudera, Inc. (NYSE:CLDR) was in 33 hedge funds' portfolios at the end of June. The all time high for this statistics is 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 26 hedge funds in our database with CLDR positions at the end of the first quarter. Our calculations also showed that CLDR 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Hondros of AlphaOne Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Now let's analyze the recent hedge fund action surrounding Cloudera, Inc. (NYSE:CLDR).
Hedge fund activity in Cloudera, Inc. (NYSE:CLDR)
At the end of the second quarter, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CLDR over the last 20 quarters. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, Icahn Capital LP held the most valuable stake in Cloudera, Inc. (NYSE:CLDR), which was worth $665.6 million at the end of the third quarter. On the second spot was RGM Capital which amassed $84.6 million worth of shares. Portolan Capital Management, Royce & Associates, and Citadel Investment Group 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 RGM Capital allocated the biggest weight to Cloudera, Inc. (NYSE:CLDR), around 5.09% of its 13F portfolio. Icahn Capital LP is also relatively very bullish on the stock, designating 3.37 percent of its 13F equity portfolio to CLDR.
Now, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the biggest position in Cloudera, Inc. (NYSE:CLDR). Arrowstreet Capital had $10.8 million invested in the company at the end of the quarter. David Brown's Hawk Ridge Management also made a $4 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark Coe's Intrinsic Edge Capital, Paul Hondros's AlphaOne Capital Partners, and Michael Gelband's ExodusPoint Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Cloudera, Inc. (NYSE:CLDR) but similarly valued. We will take a look at Ballard Power Systems Inc. (NASDAQ:BLDP), Novanta Inc. (NASDAQ:NOVT), Portland General Electric Company (NYSE:POR), Perspecta Inc. (NYSE:PRSP), BRP Inc. (NASDAQ:DOOO), Curtiss-Wright Corp. (NYSE:CW), and YETI Holdings, Inc. (NYSE:YETI). This group of stocks' market valuations are closest to CLDR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BLDP,16,76980,6 NOVT,18,103718,8 POR,21,164563,-2 PRSP,46,653988,14 DOOO,14,149741,4 CW,26,257924,5 YETI,22,155265,2 Average,23.3,223168,5.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $223 million. That figure was $856 million in CLDR's case. Perspecta Inc. (NYSE:PRSP) is the most popular stock in this table. On the other hand BRP Inc. (NASDAQ:DOOO) is the least popular one with only 14 bullish hedge fund positions. Cloudera, Inc. (NYSE:CLDR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CLDR is 69.7. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately CLDR wasn't nearly as popular as these 10 stocks and hedge funds that were betting on CLDR were disappointed as the stock returned 3.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.