U.S. Markets closed

Were Hedge Funds Right About Betting On SVMK Inc. (SVMK)?

Nina Todic

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of SVMK Inc. (NASDAQ:SVMK).

SVMK Inc. (NASDAQ:SVMK) was in 23 hedge funds' portfolios at the end of June. SVMK shareholders have witnessed an increase in enthusiasm from smart money in recent months. There were 20 hedge funds in our database with SVMK holdings at the end of the previous quarter. Our calculations also showed that SVMK isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Chase Coleman Tiger Global

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a peek at the recent hedge fund action regarding SVMK Inc. (NASDAQ:SVMK).

Hedge fund activity in SVMK Inc. (NASDAQ:SVMK)

At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in SVMK over the last 16 quarters. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

No of Hedge Funds with SVMK Positions

More specifically, Tiger Global Management LLC was the largest shareholder of SVMK Inc. (NASDAQ:SVMK), with a stake worth $224.3 million reported as of the end of March. Trailing Tiger Global Management LLC was Park West Asset Management, which amassed a stake valued at $33 million. Legion Partners Asset Management, ThornTree Capital Partners, and Hunt Lane Capital were also very fond of the stock, giving the stock large weights in their portfolios.

As industrywide interest jumped, specific money managers have jumped into SVMK Inc. (NASDAQ:SVMK) headfirst. Legion Partners Asset Management, managed by Ted White and Christopher Kiper, established the most valuable position in SVMK Inc. (NASDAQ:SVMK). Legion Partners Asset Management had $31.5 million invested in the company at the end of the quarter. Zach Schreiber's Point State Capital also initiated a $20.6 million position during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Mark N. Diker's Diker Management, and Paul Tudor Jones's Tudor Investment Corp.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as SVMK Inc. (NASDAQ:SVMK) but similarly valued. These stocks are JELD-WEN Holding, Inc. (NYSE:JELD), Artisan Partners Asset Management Inc (NYSE:APAM), Trustmark Corporation (NASDAQ:TRMK), and InVitae Corporation (NYSE:NVTA). This group of stocks' market values resemble SVMK's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JELD,16,366014,-5 APAM,15,202840,-1 TRMK,14,28099,3 NVTA,16,328969,-12 Average,15.25,231481,-3.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $453 million in SVMK's case. JELD-WEN Holding, Inc. (NYSE:JELD) is the most popular stock in this table. On the other hand Trustmark Corporation (NASDAQ:TRMK) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks SVMK Inc. (NASDAQ:SVMK) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on SVMK, though not to the same extent, as the stock returned 3.6% during the third quarter and outperformed the market as well.

Disclosure: None. This article was originally published at Insider Monkey.

Related Content