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Did Hedge Funds Make The Right Call On Tenable Holdings, Inc. (TENB) ?

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). 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 Tenable Holdings, Inc. (NASDAQ:TENB) at the end of the first quarter and determine whether the smart money was really smart about this stock.

Is Tenable Holdings, Inc. (NASDAQ:TENB) a bargain? Investors who are in the know were getting more optimistic. The number of long hedge fund bets moved up by 2 in recent months. Our calculations also showed that TENB isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

At the moment there are a large number of metrics investors can use to appraise stocks. Two of the most useful metrics are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the elite money managers can trounce their index-focused peers by a superb margin (see the details here).

TUDOR INVESTMENT CORP

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. With all of this in mind let’s view the fresh hedge fund action surrounding Tenable Holdings, Inc. (NASDAQ:TENB).

What have hedge funds been doing with Tenable Holdings, Inc. (NASDAQ:TENB)?

At Q1’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in TENB a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is TENB A Good Stock To Buy?

Among these funds, Sylebra Capital Management held the most valuable stake in Tenable Holdings, Inc. (NASDAQ:TENB), which was worth $74.2 million at the end of the third quarter. On the second spot was Greenvale Capital which amassed $66.4 million worth of shares. D E Shaw, RGM Capital, and Diker 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 Greenvale Capital allocated the biggest weight to Tenable Holdings, Inc. (NASDAQ:TENB), around 17.45% of its 13F portfolio. Sylebra Capital Management is also relatively very bullish on the stock, dishing out 3.04 percent of its 13F equity portfolio to TENB.

As industrywide interest jumped, key money managers have been driving this bullishness. RGM Capital, managed by Robert G. Moses, assembled the most outsized position in Tenable Holdings, Inc. (NASDAQ:TENB). RGM Capital had $24.4 million invested in the company at the end of the quarter. Mark N. Diker’s Diker Management also initiated a $5.3 million position during the quarter. The other funds with brand new TENB positions are Frederick DiSanto’s Ancora Advisors, Sander Gerber’s Hudson Bay Capital Management, and Greg Eisner’s Engineers Gate Manager.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Tenable Holdings, Inc. (NASDAQ:TENB) but similarly valued. These stocks are iRhythm Technologies, Inc. (NASDAQ:IRTC), The Howard Hughes Corporation (NYSE:HHC), MGIC Investment Corporation (NYSE:MTG), and Bank OZK (NASDAQ:OZK). This group of stocks’ market values are similar to TENB’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IRTC 15 176679 -7
HHC 24 792280 -1
MTG 41 268781 4
OZK 25 146154 0
Average 26.25 345974 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $346 million. That figure was $237 million in TENB’s case. MGIC Investment Corporation (NYSE:MTG) is the most popular stock in this table. On the other hand iRhythm Technologies, Inc. (NASDAQ:IRTC) is the least popular one with only 15 bullish hedge fund positions. Tenable Holdings, Inc. (NASDAQ:TENB) is not the least popular stock in this group but hedge fund interest is still below average. 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 gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on TENB as the stock returned 36.4% during the second quarter and outperformed the market by an even larger margin.

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