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With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was C3.ai, Inc. (NYSE:AI).
C3.ai, Inc. (NYSE:AI) investors should be aware of an increase in support from the world's most elite money managers of late. C3.ai, Inc. (NYSE:AI) was in 29 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 37. There were 27 hedge funds in our database with AI positions at the end of the first quarter. Our calculations also showed that AI 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.
Philippe Laffont of Coatue Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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 we're going to go over the key hedge fund action surrounding C3.ai, Inc. (NYSE:AI).
Do Hedge Funds Think AI Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in AI 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.
Among these funds, Tiger Global Management LLC held the most valuable stake in C3.ai, Inc. (NYSE:AI), which was worth $62.5 million at the end of the second quarter. On the second spot was Coatue Management which amassed $48.7 million worth of shares. Tudor Investment Corp, Citadel Investment Group, and D E Shaw 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 Kayak Investment Partners allocated the biggest weight to C3.ai, Inc. (NYSE:AI), around 1.31% of its 13F portfolio. Element Capital Management is also relatively very bullish on the stock, earmarking 0.99 percent of its 13F equity portfolio to AI.
As industrywide interest jumped, key money managers have jumped into C3.ai, Inc. (NYSE:AI) headfirst. D E Shaw, managed by D. E. Shaw, initiated the biggest position in C3.ai, Inc. (NYSE:AI). D E Shaw had $14.3 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $8.7 million position during the quarter. The other funds with new positions in the stock are Frank Fu's CaaS Capital, Jeffrey Talpins's Element Capital Management, and Renaissance Technologies.
Let's also examine hedge fund activity in other stocks similar to C3.ai, Inc. (NYSE:AI). These stocks are Halozyme Therapeutics, Inc. (NASDAQ:HALO), Stitch Fix, Inc. (NASDAQ:SFIX), BlackLine, Inc. (NASDAQ:BL), American Campus Communities, Inc. (NYSE:ACC), Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), and Affiliated Managers Group, Inc. (NYSE:AMG). All of these stocks' market caps resemble AI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HALO,20,194639,-3 SFIX,35,702790,7 BL,20,266005,-4 ACC,21,222547,-5 RARE,32,770180,7 WSC,52,1399877,5 AMG,30,784733,4 Average,30,620110,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $620 million. That figure was $259 million in AI's case. WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) is the most popular stock in this table. On the other hand Halozyme Therapeutics, Inc. (NASDAQ:HALO) is the least popular one with only 20 bullish hedge fund positions. C3.ai, Inc. (NYSE:AI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AI is 44.6. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately AI wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AI investors were disappointed as the stock returned -27.6% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.