There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Tableau Software Inc (NYSE:DATA).
Is Tableau Software Inc (NYSE:DATA) a safe investment right now? The smart money is becoming less confident. The number of long hedge fund positions shrunk by 1 recently. Our calculations also showed that DATA isn't among the 30 most popular stocks among hedge funds. DATA was in 36 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 37 hedge funds in our database with DATA positions 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 market by 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a look at the key hedge fund action surrounding Tableau Software Inc (NYSE:DATA).
Hedge fund activity in Tableau Software Inc (NYSE:DATA)
At Q4's end, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DATA over the last 14 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Matrix Capital Management, managed by David Goel and Paul Ferri, holds the largest position in Tableau Software Inc (NYSE:DATA). Matrix Capital Management has a $459 million position in the stock, comprising 15.2% of its 13F portfolio. Coming in second is Altimeter Capital Management, led by Brad Gerstner, holding a $418.2 million position; 15.2% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism comprise Philippe Laffont's Coatue Management, Michael Lowenstein's Kensico Capital and Mick Hellman's HMI Capital.
Since Tableau Software Inc (NYSE:DATA) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there were a few money managers who sold off their entire stakes by the end of the third quarter. It's worth mentioning that Adam Wolfberg and Steven Landry's EastBay Asset Management dropped the biggest investment of the 700 funds monitored by Insider Monkey, worth about $19.5 million in stock. Mark Kingdon's fund, Kingdon Capital, also said goodbye to its stock, about $17.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Tableau Software Inc (NYSE:DATA) but similarly valued. These stocks are Alliant Energy Corporation (NASDAQ:LNT), Apache Corporation (NYSE:APA), FMC Corporation (NYSE:FMC), and Akamai Technologies, Inc. (NASDAQ:AKAM). This group of stocks' market values are similar to DATA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LNT,28,604082,8 APA,29,475425,3 FMC,32,1377346,-5 AKAM,34,902737,5 Average,30.75,839898,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $840 million. That figure was $2251 million in DATA's case. Akamai Technologies, Inc. (NASDAQ:AKAM) is the most popular stock in this table. On the other hand Alliant Energy Corporation (NASDAQ:LNT) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Tableau Software Inc (NYSE:DATA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately DATA wasn't in this group. Hedge funds that bet on DATA were disappointed as the stock returned 8.7% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.