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Were Hedge Funds Right About Flocking Into MongoDB, Inc. (MDB) ?

Reymerlyn Martin

Insider Monkey finished processing more than 700 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2018. What do these smart investors think about MongoDB, Inc. (NASDAQ:MDB)?

MongoDB, Inc. (NASDAQ:MDB) was in 23 hedge funds' portfolios at the end of the fourth quarter of 2018. MDB has seen an increase in activity from the world's largest hedge funds in recent months. There were 21 hedge funds in our database with MDB positions at the end of the previous quarter. Our calculations also showed that MDB isn't among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Nehal Chopra Tiger Ratan Capital Group

We're going to take a gander at the recent hedge fund action encompassing MongoDB, Inc. (NASDAQ:MDB).

What does the smart money think about MongoDB, Inc. (NASDAQ:MDB)?

At Q4's end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards MDB over the last 14 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

MDB_apr2019

When looking at the institutional investors followed by Insider Monkey, Whale Rock Capital Management, managed by Alex Sacerdote, holds the largest position in MongoDB, Inc. (NASDAQ:MDB). Whale Rock Capital Management has a $200.2 million position in the stock, comprising 6.4% of its 13F portfolio. On Whale Rock Capital Management's heels is Christopher Lyle of SCGE Management, with a $88.1 million position; the fund has 7.8% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions include Glen Kacher's Light Street Capital, Amish Mehta's SQN Investors and Jim Simons's Renaissance Technologies.

As aggregate interest increased, specific money managers were breaking ground themselves. Light Street Capital, managed by Glen Kacher, initiated the largest position in MongoDB, Inc. (NASDAQ:MDB). Light Street Capital had $43 million invested in the company at the end of the quarter. Nehal Chopra's Ratan Capital Group also initiated a $8.7 million position during the quarter. The following funds were also among the new MDB investors: Michael Gelband's ExodusPoint Capital, D. E. Shaw's D E Shaw, and Joe DiMenna's ZWEIG DIMENNA PARTNERS.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as MongoDB, Inc. (NASDAQ:MDB) but similarly valued. We will take a look at Curtiss-Wright Corp. (NYSE:CW), United States Cellular Corporation (NYSE:USM), Buckeye Partners, L.P. (NYSE:BPL), and LivaNova PLC (NASDAQ:LIVN). All of these stocks' market caps are similar to MDB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CW,20,355686,-2 USM,17,208533,2 BPL,5,6109,0 LIVN,22,375931,-8 Average,16,236565,-2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $237 million. That figure was $510 million in MDB's case. LivaNova PLC (NASDAQ:LIVN) is the most popular stock in this table. On the other hand Buckeye Partners, L.P. (NYSE:BPL) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks MongoDB, Inc. (NASDAQ:MDB) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on MDB as the stock returned 55.7% 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.

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