5 Small-Cap Growth Stocks Hedge Funds Love

1. Coupa Software Incorporated (NASDAQ:COUP)

Number of Hedge Fund Shareholders: 46

Hedge fund ownership of Coupa Software Incorporated (NASDAQ:COUP) fell by 22% in the first quarter, which wasn’t enough to stop the company from topping our list of small-cap growth stocks that hedge funds love. Stanley Druckenmiller and Steve Cohen were among the prominent hedge fund managers to unload COUP from their portfolios during Q1.

Coupa Software Incorporated (NASDAQ:COUP)’s cloud-based business spend management platform utilizes AI to analyze and help inform company’s invoicing, supply chain, and other decisions. Demand for the company’s software continues to be robust given the ongoing supply chain challenges facing many companies.

The Aristotle Large Cap Growth Fund explained why it, and possibly other hedge funds, decided to sell off Coupa Software Incorporated (NASDAQ:COUP) during Q1, having this to say about the company in its Q1 2022 investor letter:

“We sold our position in Coupa Software following the company’s fourth quarter 2021 earnings results. The company reported earnings that were disappointing relative to the growth trajectory of both pre-COVID and prior quarters over the past fiscal year. We are concerned that the company is seeing slowing traction in the enterprise sector and felt that the weak topline and billings guidance along with margin compression from increased sales and marketing costs creates too many headwinds for us to be comfortable with. The weak fiscal year 2023 billings guidance when combined with management’s qualitative comments about a strong pipeline is concerning to us, and we believe management has done a disappointing job in providing more transparency around the growth drivers for the business.”

For more of the latest stock picks worth considering for your portfolio, check out 10 Best Cyclical Stocks for Inflation and Top 10 Stock Picks of Teresa Barger’s Cartica Management.

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