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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks aren't doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to HubSpot Inc (NYSE:HUBS) changed recently.
Is HUBS a good stock to buy now? Money managers were reducing their bets on the stock. The number of bullish hedge fund bets fell by 1 recently. HubSpot Inc (NYSE:HUBS) was in 40 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 41. Our calculations also showed that HUBS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 41 hedge funds in our database with HUBS holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most shareholders, hedge funds are assumed to be slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation today, Our researchers look at the elite of this club, approximately 850 funds. These money managers direct most of the hedge fund industry's total capital, and by observing their unrivaled picks, Insider Monkey has uncovered a number of investment strategies that have historically defeated the market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's take a look at the recent hedge fund action encompassing HubSpot Inc (NYSE:HUBS).
Do Hedge Funds Think HUBS Is A Good Stock To Buy Now?
At the end of September, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HUBS over the last 21 quarters. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, SCGE Management was the largest shareholder of HubSpot Inc (NYSE:HUBS), with a stake worth $411.5 million reported as of the end of September. Trailing SCGE Management was Citadel Investment Group, which amassed a stake valued at $134.4 million. North Peak Capital, Polar Capital, and Hitchwood Capital Management 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 North Peak Capital allocated the biggest weight to HubSpot Inc (NYSE:HUBS), around 21.46% of its 13F portfolio. Greenlea Lane Capital is also relatively very bullish on the stock, designating 7.65 percent of its 13F equity portfolio to HUBS.
Judging by the fact that HubSpot Inc (NYSE:HUBS) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain "tier" of fund managers who were dropping their positions entirely heading into Q4. Intriguingly, Highbridge Capital Management cut the biggest investment of the "upper crust" of funds monitored by Insider Monkey, worth an estimated $2.2 million in stock, and Robert Henry Lynch's Aristeia Capital was right behind this move, as the fund said goodbye to about $2.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds heading into Q4.
Let's check out hedge fund activity in other stocks similar to HubSpot Inc (NYSE:HUBS). We will take a look at Mid America Apartment Communities Inc (NYSE:MAA), The Hartford Financial Services Group Inc (NYSE:HIG), Teradyne, Inc. (NASDAQ:TER), Elanco Animal Health Incorporated (NYSE:ELAN), Tradeweb Markets Inc. (NASDAQ:TW), The J.M. Smucker Company (NYSE:SJM), and Darden Restaurants, Inc. (NYSE:DRI). This group of stocks' market values match HUBS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MAA,27,449666,-3 HIG,36,966601,-3 TER,42,1365348,8 ELAN,21,302734,-9 TW,24,297199,-9 SJM,31,763149,-7 DRI,41,1183411,-8 Average,31.7,761158,-4.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $761 million. That figure was $1187 million in HUBS's case. Teradyne, Inc. (NASDAQ:TER) is the most popular stock in this table. On the other hand Elanco Animal Health Incorporated (NYSE:ELAN) is the least popular one with only 21 bullish hedge fund positions. HubSpot Inc (NYSE:HUBS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HUBS is 78.5. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on HUBS as the stock returned 30.7% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.