Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Tufin Software Technologies Ltd. (NYSE:TUFN).
Tufin Software Technologies Ltd. (NYSE:TUFN) has seen an increase in activity from the world's largest hedge funds in recent months. Our calculations also showed that TUFN isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are several formulas market participants employ to assess their stock investments. Two of the less utilized formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the best money managers can outperform the broader indices by a very impressive margin (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a peek at the new hedge fund action regarding Tufin Software Technologies Ltd. (NYSE:TUFN).
How have hedgies been trading Tufin Software Technologies Ltd. (NYSE:TUFN)?
At the end of the second quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6 from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in TUFN 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.
More specifically, Steadfast Capital Management was the largest shareholder of Tufin Software Technologies Ltd. (NYSE:TUFN), with a stake worth $20.8 million reported as of the end of March. Trailing Steadfast Capital Management was Driehaus Capital, which amassed a stake valued at $9 million. Millennium Management, Tudor Investment Corp, and Springbok Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, some big names have jumped into Tufin Software Technologies Ltd. (NYSE:TUFN) headfirst. Steadfast Capital Management, managed by Robert Pitts, established the most outsized position in Tufin Software Technologies Ltd. (NYSE:TUFN). Steadfast Capital Management had $20.8 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also initiated a $9 million position during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, Paul Tudor Jones's Tudor Investment Corp, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's also examine hedge fund activity in other stocks similar to Tufin Software Technologies Ltd. (NYSE:TUFN). We will take a look at Natus Medical Inc (NASDAQ:BABY), Trueblue Inc (NYSE:TBI), Forrester Research, Inc. (NASDAQ:FORR), and The Andersons, Inc. (NASDAQ:ANDE). All of these stocks' market caps are closest to TUFN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BABY,22,93186,-2 TBI,15,83342,-2 FORR,10,61046,-3 ANDE,5,37702,-3 Average,13,68819,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $35 million in TUFN's case. Natus Medical Inc (NASDAQ:BABY) is the most popular stock in this table. On the other hand The Andersons, Inc. (NASDAQ:ANDE) is the least popular one with only 5 bullish hedge fund positions. Tufin Software Technologies Ltd. (NYSE:TUFN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately TUFN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TUFN investors were disappointed as the stock returned -36.4% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.