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Hedge Funds Have Never Been This Bullish On MongoDB, Inc. (MDB)

Reymerlyn Martin

The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and famous investors' filings. In this article, we analyze how these elite funds and prominent investors traded MongoDB, Inc. (NASDAQ:MDB) based on those filings.

MongoDB, Inc. (NASDAQ:MDB) has seen an increase in hedge fund interest of late. Our calculations also showed that MDB isn't among the 30 most popular stocks among hedge funds.

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 market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Glen Kacher Light Street

Let's take a look at the recent hedge fund action encompassing MongoDB, Inc. (NASDAQ:MDB).

How have hedgies been trading MongoDB, Inc. (NASDAQ:MDB)?

At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in MDB over the last 15 quarters. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

MDB_jun2019

Among these funds, Whale Rock Capital Management held the most valuable stake in MongoDB, Inc. (NASDAQ:MDB), which was worth $351.3 million at the end of the first quarter. On the second spot was SCGE Management which amassed $128.5 million worth of shares. Moreover, Renaissance Technologies, Light Street Capital, and D E Shaw were also bullish on MongoDB, Inc. (NASDAQ:MDB), allocating a large percentage of their portfolios to this stock.

Consequently, key hedge funds have been driving this bullishness. Tiger Global Management, managed by Chase Coleman, established the largest position in MongoDB, Inc. (NASDAQ:MDB). Tiger Global Management had $34.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $13.1 million position during the quarter. The following funds were also among the new MDB investors: Israel Englander's Millennium Management, Ken Griffin's Citadel Investment Group, and Larry Chen and Terry Zhang's Tairen Capital.

Let's now take a look at hedge fund activity in other stocks similar to MongoDB, Inc. (NASDAQ:MDB). We will take a look at BorgWarner Inc. (NYSE:BWA), Post Holdings Inc (NYSE:POST), Momo Inc (NASDAQ:MOMO), and Guidewire Software Inc (NYSE:GWRE). This group of stocks' market caps are closest to MDB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BWA,21,667423,-1 POST,27,1333879,-1 MOMO,21,826292,0 GWRE,26,688585,6 Average,23.75,879045,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $879 million. That figure was $962 million in MDB's case. Post Holdings Inc (NYSE:POST) is the most popular stock in this table. On the other hand BorgWarner Inc. (NYSE:BWA) is the least popular one with only 21 bullish hedge fund positions. MongoDB, Inc. (NASDAQ:MDB) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately MDB wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MDB were disappointed as the stock returned -4.8% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

Disclosure: None. This article was originally published at Insider Monkey.\

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