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Was The Smart Money Right About Atlassian Corporation Plc (TEAM)?

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  • TEAM

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on Atlassian Corporation Plc (NASDAQ:TEAM).

Atlassian Corporation Plc (NASDAQ:TEAM) investors should be aware of a decrease in support from the world's most elite money managers recently. Atlassian Corporation Plc (NASDAQ:TEAM) was in 64 hedge funds' portfolios at the end of June. The all time high for this statistic is 69. Our calculations also showed that TEAM isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ole Andreas Halvorsen Viking Global
Ole Andreas Halvorsen Viking Global

Ole Andreas Halvorsen of Viking Global

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's review the recent hedge fund action regarding Atlassian Corporation Plc (NASDAQ:TEAM).

Do Hedge Funds Think TEAM Is A Good Stock To Buy Now?

At Q2's end, a total of 64 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the first quarter of 2020. By comparison, 55 hedge funds held shares or bullish call options in TEAM a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TEAM A Good Stock To Buy?
Is TEAM A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the number one position in Atlassian Corporation Plc (NASDAQ:TEAM). Renaissance Technologies has a $845.9 million position in the stock, comprising 1.1% of its 13F portfolio. The second most bullish fund manager is Tiger Global Management LLC, managed by Chase Coleman, which holds a $633.3 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass Gabriel Plotkin's Melvin Capital Management, Michael Pausic's Foxhaven Asset Management and Panayotis Takis Sparaggis's Alkeon Capital Management. In terms of the portfolio weights assigned to each position Strategy Capital allocated the biggest weight to Atlassian Corporation Plc (NASDAQ:TEAM), around 13.39% of its 13F portfolio. One01 Capital is also relatively very bullish on the stock, setting aside 8.44 percent of its 13F equity portfolio to TEAM.

Since Atlassian Corporation Plc (NASDAQ:TEAM) has experienced declining sentiment from the entirety of the hedge funds we track, it's easy to see that there was a specific group of funds that slashed their full holdings by the end of the second quarter. It's worth mentioning that Lone Pine Capital dropped the largest stake of the 750 funds tracked by Insider Monkey, totaling about $626.9 million in stock, and Catherine D. Wood's ARK Investment Management was right behind this move, as the fund cut about $60.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds by the end of the second quarter.

Let's now review hedge fund activity in other stocks similar to Atlassian Corporation Plc (NASDAQ:TEAM). We will take a look at Autodesk, Inc. (NASDAQ:ADSK), The Southern Company (NYSE:SO), Air Products & Chemicals, Inc. (NYSE:APD), Analog Devices, Inc. (NASDAQ:ADI), Stellantis N.V. (NYSE:STLA), Banco Santander (Brasil) SA (NYSE:BSBR), and Roku, Inc. (NASDAQ:ROKU). This group of stocks' market values resemble TEAM's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADSK,64,3201341,-2 SO,37,606405,2 APD,40,456440,8 ADI,62,5796275,12 STLA,28,844328,7 BSBR,7,9630,2 ROKU,61,5631958,-2 Average,42.7,2363768,3.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.7 hedge funds with bullish positions and the average amount invested in these stocks was $2364 million. That figure was $4170 million in TEAM's case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 7 bullish hedge fund positions. Atlassian Corporation Plc (NASDAQ:TEAM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TEAM is 79.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Hedge funds were also right about betting on TEAM as the stock returned 78.4% since the end of Q2 (through 10/29) 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.