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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Okta, Inc. (NASDAQ:OKTA)?
Okta, Inc. (NASDAQ:OKTA) has experienced an increase in hedge fund sentiment in recent months. Our calculations also showed that OKTA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 44 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_735677" align="aligncenter" width="400"] Sander Gerber of Hudson Bay Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. Also, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to check out the new hedge fund action encompassing Okta, Inc. (NASDAQ:OKTA).
What have hedge funds been doing with Okta, Inc. (NASDAQ:OKTA)?
Heading into the second quarter of 2020, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the previous quarter. On the other hand, there were a total of 43 hedge funds with a bullish position in OKTA a year ago. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, Whale Rock Capital Management held the most valuable stake in Okta, Inc. (NASDAQ:OKTA), which was worth $228.3 million at the end of the third quarter. On the second spot was Alkeon Capital Management which amassed $195.2 million worth of shares. SCGE Management, Zevenbergen Capital Investments, and SQN Investors 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 SQN Investors allocated the biggest weight to Okta, Inc. (NASDAQ:OKTA), around 8.5% of its 13F portfolio. Cota Capital is also relatively very bullish on the stock, designating 5.73 percent of its 13F equity portfolio to OKTA.
Consequently, key money managers have jumped into Okta, Inc. (NASDAQ:OKTA) headfirst. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, initiated the most valuable position in Okta, Inc. (NASDAQ:OKTA). Polar Capital had $39.6 million invested in the company at the end of the quarter. Renaissance Technologies also made a $25.6 million investment in the stock during the quarter. The following funds were also among the new OKTA investors: Sander Gerber's Hudson Bay Capital Management, Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali's Alta Park Capital, and Daryl Smith's Kayak Investment Partners.
Let's check out hedge fund activity in other stocks similar to Okta, Inc. (NASDAQ:OKTA). These stocks are Carrier Global Corporation (NYSE:CARR), Slack Technologies Inc (NYSE:WORK), Chewy, Inc. (NYSE:CHWY), and ORIX Corporation (NYSE:IX). This group of stocks' market valuations match OKTA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CARR,3,9338,3 WORK,31,465454,2 CHWY,36,493004,1 IX,4,6659,-2 Average,18.5,243614,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $244 million. That figure was $1087 million in OKTA's case. Chewy, Inc. (NYSE:CHWY) is the most popular stock in this table. On the other hand Carrier Global Corporation (NYSE:CARR) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Okta, Inc. (NASDAQ:OKTA) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on OKTA as the stock returned 57.4% so far in Q2 (through May 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.