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Anaplan, Inc. (PLAN): Hedge Funds Taking Some Chips Off The Table

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Anaplan, Inc. (NYSE:PLAN) at the end of the second quarter and determine whether the smart money was really smart about this stock.

Anaplan, Inc. (NYSE:PLAN) has seen a decrease in hedge fund interest lately. Anaplan, Inc. (NYSE:PLAN) was in 49 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 46. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PLAN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are several metrics shareholders have at their disposal to grade stocks. A duo of the most under-the-radar metrics are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite fund managers can beat the S&P 500 by a very impressive margin (see the details here).

Michael Lowenstein Kensico Capital

Michael Lowenstein of Kensico Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we’re going to go over the latest hedge fund action surrounding Anaplan, Inc. (NYSE:PLAN).

What have hedge funds been doing with Anaplan, Inc. (NYSE:PLAN)?

At second quarter’s end, a total of 49 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PLAN over the last 20 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

More specifically, Coatue Management was the largest shareholder of Anaplan, Inc. (NYSE:PLAN), with a stake worth $391.1 million reported as of the end of September. Trailing Coatue Management was Tiger Global Management LLC, which amassed a stake valued at $308.1 million. Viking Global, D1 Capital Partners, and Steadfast Capital Management 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 Cowbird Capital allocated the biggest weight to Anaplan, Inc. (NYSE:PLAN), around 12.4% of its 13F portfolio. Clearfield Capital is also relatively very bullish on the stock, designating 8.27 percent of its 13F equity portfolio to PLAN.

Judging by the fact that Anaplan, Inc. (NYSE:PLAN) has faced falling interest from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds who were dropping their positions entirely heading into Q3. Intriguingly, Lone Pine Capital sold off the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling close to $66.6 million in stock, and Alex Sacerdote’s Whale Rock Capital Management was right behind this move, as the fund dumped about $40.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q3.

Let’s now review hedge fund activity in other stocks similar to Anaplan, Inc. (NYSE:PLAN). These stocks are MKS Instruments, Inc. (NASDAQ:MKSI), PRA Health Sciences Inc (NASDAQ:PRAH), Herbalife Nutrition Ltd. (NYSE:HLF), LPL Financial Holdings Inc (NASDAQ:LPLA), BanColombia S.A. (NYSE:CIB), Assurant, Inc. (NYSE:AIZ), and Encompass Health Corporation (NYSE:EHC). This group of stocks’ market caps are closest to PLAN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MKSI 32 329943 5
PRAH 33 169611 4
HLF 36 3052037 5
LPLA 43 892669 10
CIB 9 69617 -2
AIZ 31 822763 -2
EHC 33 498955 0
Average 31 833656 2.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $834 million. That figure was $2182 million in PLAN’s case. LPL Financial Holdings Inc (NASDAQ:LPLA) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Anaplan, Inc. (NYSE:PLAN) is more popular among hedge funds. Our overall hedge fund sentiment score for PLAN is 83. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 33% in 2020 through the end of August but still managed to beat the market by 23.2 percentage points. Hedge funds were also right about betting on PLAN as the stock returned 35.2% since the end of June and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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