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Were Hedge Funds Right About Flocking Into Smartsheet Inc. (SMAR) ?

Nina Todic

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and investors' positions as of the end of the fourth quarter. You can find write-ups about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Smartsheet Inc. (NYSE:SMAR) based on that data.

Smartsheet Inc. (NYSE:SMAR) shareholders have witnessed an increase in hedge fund interest in recent months. Our calculations also showed that smar isn't among the 30 most popular stocks among hedge funds.

If you'd ask most market participants, hedge funds are perceived as unimportant, old investment tools of yesteryear. While there are over 8000 funds in operation at present, We look at the upper echelon of this club, around 750 funds. These hedge fund managers direct most of the hedge fund industry's total asset base, and by keeping track of their inimitable equity investments, Insider Monkey has unsheathed numerous investment strategies that have historically exceeded the broader indices. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

Richard Driehaus

We're going to take a gander at the key hedge fund action regarding Smartsheet Inc. (NYSE:SMAR).

What have hedge funds been doing with Smartsheet Inc. (NYSE:SMAR)?

At Q4's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 55% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SMAR over the last 14 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

No of Hedge Funds with SMAR Positions

Of the funds tracked by Insider Monkey, Alex Sacerdote's Whale Rock Capital Management has the biggest position in Smartsheet Inc. (NYSE:SMAR), worth close to $66.8 million, corresponding to 2.1% of its total 13F portfolio. The second most bullish fund manager is Alkeon Capital Management, led by Panayotis Takis Sparaggis, holding a $44.2 million position; 0.3% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include Joel Ramin's 12 West Capital Management, Richard Driehaus's Driehaus Capital and Daryl Smith's Kayak Investment Partners.

As industrywide interest jumped, key money managers were breaking ground themselves. Kayak Investment Partners, managed by Daryl Smith, created the most valuable position in Smartsheet Inc. (NYSE:SMAR). Kayak Investment Partners had $8.2 million invested in the company at the end of the quarter. Ravee Mehta's Nishkama Capital also made a $5.9 million investment in the stock during the quarter. The following funds were also among the new SMAR investors: Mark N. Diker's Diker Management, Spencer M. Waxman's Shannon River Fund Management, and Jeffrey Hoffner's Engle Capital.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Smartsheet Inc. (NYSE:SMAR) but similarly valued. These stocks are Cabot Corporation (NYSE:CBT), Weight Watchers International, Inc. (NASDAQ:WTW), Coherent, Inc. (NASDAQ:COHR), and AVX Corporation (NYSE:AVX). This group of stocks' market caps match SMAR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CBT,29,124001,5 WTW,23,140552,-8 COHR,17,104247,4 AVX,16,120045,0 Average,21.25,122211,0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $186 million in SMAR's case. Cabot Corporation (NYSE:CBT) is the most popular stock in this table. On the other hand AVX Corporation (NYSE:AVX) is the least popular one with only 16 bullish hedge fund positions. Smartsheet Inc. (NYSE:SMAR) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on SMAR as the stock returned 65% and outperformed the market by an even larger margin.

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

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