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 have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31 holdings, data that is available nowhere else. Should you consider Yext, Inc. (NYSE:YEXT) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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.
Let's view the new hedge fund action surrounding Yext, Inc. (NYSE:YEXT).
What does the smart money think about Yext, Inc. (NYSE:YEXT)?
At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 77% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in YEXT a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, D E Shaw was the largest shareholder of Yext, Inc. (NYSE:YEXT), with a stake worth $48.2 million reported as of the end of March. Trailing D E Shaw was Renaissance Technologies, which amassed a stake valued at $36 million. Two Sigma Advisors, Element Capital Management, and Whetstone Capital Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, specific money managers were breaking ground themselves. Element Capital Management, managed by Jeffrey Talpins, initiated the most valuable position in Yext, Inc. (NYSE:YEXT). Element Capital Management had $20 million invested in the company at the end of the quarter. George McCabe's Portolan Capital Management also made a $10.6 million investment in the stock during the quarter. The following funds were also among the new YEXT investors: Paul Marshall and Ian Wace's Marshall Wace LLP, Philip Hempleman's Ardsley Partners, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Yext, Inc. (NYSE:YEXT) but similarly valued. These stocks are Jagged Peak Energy Inc. (NYSE:JAG), Wingstop Inc (NASDAQ:WING), 360 Finance, Inc. (NASDAQ:QFIN), and Sally Beauty Holdings, Inc. (NYSE:SBH). This group of stocks' market caps resemble YEXT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JAG,12,133102,2 WING,24,246752,3 QFIN,1,548,-1 SBH,19,175672,-3 Average,14,139019,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $203 million in YEXT's case. Wingstop Inc (NASDAQ:WING) is the most popular stock in this table. On the other hand 360 Finance, Inc. (NASDAQ:QFIN) is the least popular one with only 1 bullish hedge fund positions. Yext, Inc. (NYSE:YEXT) 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 YEXT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on YEXT were disappointed as the stock returned -12.5% 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.