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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Zoom Video Communications, Inc. (NASDAQ:ZM).
Zoom Video Communications, Inc. (NASDAQ:ZM) shareholders have witnessed a decrease in hedge fund sentiment in recent months. Zoom Video Communications, Inc. (NASDAQ:ZM) was in 54 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 59. There were 59 hedge funds in our database with ZM holdings at the end of December. Our calculations also showed that ZM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To the average investor there are plenty of formulas shareholders can use to value publicly traded companies. A pair of the most under-the-radar formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top money managers can outperform the market by a solid amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Ian Wace of Marshall Wace
At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 take a gander at the key hedge fund action encompassing Zoom Video Communications, Inc. (NASDAQ:ZM).
Do Hedge Funds Think ZM Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in ZM over the last 23 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Zoom Video Communications, Inc. (NASDAQ:ZM) was held by ARK Investment Management, which reported holding $964.6 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $809.9 million position. Other investors bullish on the company included Tiger Global Management LLC, Citadel Investment Group, and Hillhouse Capital Management. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to Zoom Video Communications, Inc. (NASDAQ:ZM), around 7.07% of its 13F portfolio. 0 is also relatively very bullish on the stock, dishing out 6.27 percent of its 13F equity portfolio to ZM.
Because Zoom Video Communications, Inc. (NASDAQ:ZM) has faced a decline in interest from hedge fund managers, we can see that there is a sect of funds that slashed their full holdings in the first quarter. Interestingly, Alex Sacerdote's Whale Rock Capital Management dropped the biggest position of all the hedgies followed by Insider Monkey, worth about $353.9 million in stock, and James Crichton's Hitchwood Capital Management was right behind this move, as the fund said goodbye to about $27.7 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 5 funds in the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Zoom Video Communications, Inc. (NASDAQ:ZM) but similarly valued. These stocks are Stryker Corporation (NYSE:SYK), GlaxoSmithKline plc (NYSE:GSK), Vale SA (NYSE:VALE), British American Tobacco plc (NYSE:BTI), Anthem Inc (NYSE:ANTM), Intuitive Surgical, Inc. (NASDAQ:ISRG), and Fidelity National Information Services Inc. (NYSE:FIS). This group of stocks' market values are closest to ZM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SYK,46,3154010,2 GSK,25,1359731,-5 VALE,31,2615665,-4 BTI,14,1034777,4 ANTM,58,5373054,-12 ISRG,53,2326096,4 FIS,74,8251021,-14 Average,43,3444908,-3.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $3445 million. That figure was $5672 million in ZM's case. Fidelity National Information Services Inc. (NYSE:FIS) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 14 bullish hedge fund positions. Zoom Video Communications, Inc. (NASDAQ:ZM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZM is 60.8. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on ZM as the stock returned 14% since the end of Q1 (through 6/11) 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.