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Why Pure Storage Inc (PSTG)’s Shares Plunged on Thursday?

It’s been a quiet day on Wall Street as the prices of the major indexes are roughly flat on the day as investors look forward to the upcoming GDP release on Friday. Meanwhile, Pure Storage Inc (NYSE:PSTG) is 16% in the red today after the tech company reported a loss of $0.22 per share on revenue of $139.9 million for its first quarter, beating estimates by $0.01 per share and $1.77 million respectively. Although the earnings were better than analysts’ estimates, they were below the market’s expectations on the account of Pure Storage’s previous big beats. The quarterly non-GAAP  gross margin was 67.3%, up by 6.8 points year-over-year. The second quarter guidance includes revenue in the range of $153 million to $157 million, versus the $153.8 million analysts expect. The company didn’t issue full year guidance.

In today’s marketplace there is a multitude of gauges shareholders use to evaluate stocks. Two of the most useful gauges are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace the market by a superb amount (see the details here).

At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Among the funds tracked by Insider Monkey, billionaire Chase Coleman’s Tiger Global Management reported the largest stake in Pure Storage as of the end of March. Tiger Global held a stake worth $71.8 million, according to its latest 13F filing. On the second place is Brad Gerstner’s Altimeter Capital Management, which held around $37.6 million worth of stock heading into the second quarter. Other investors bullish on Pure Storage include Stanley Druckenmiller’s Duquesne Capital, Leon Shaulov’s Maplelane Capital, and Philippe Laffont’s Coatue Management.

Despite the fact that the number of funds long Pure Storage remained unchanged, a few funds reported new stakes in their last 13F filings. Among these investors, Israel Englander’s Millennium Management initiated a stake worth $0.7 million during the first quarter. Other funds with new positions in Pure Storage include Eduardo Costa’s Calixto Global Investors, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Two Sigma Advisors, led by John Overdeck and David Siegel. On the other hand, George Soros’ Soros Fund Management unloaded its entire stake in Pure Storage, which had been worth $12.5 million.

Disclosure: None

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