The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Snowflake Inc (NYSE:SNOW) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
Snowflake Inc (NYSE:SNOW) has experienced an increase in hedge fund interest in recent months. Snowflake Inc (NYSE:SNOW) was in 73 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 71. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SNOW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Philippe Laffont of Coatue Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind let’s take a peek at the new hedge fund action surrounding Snowflake Inc (NYSE:SNOW).
Do Hedge Funds Think SNOW Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 73 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. By comparison, 59 hedge funds held shares or bullish call options in SNOW a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Altimeter Capital Management was the largest shareholder of Snowflake Inc (NYSE:SNOW), with a stake worth $6362.3 million reported as of the end of September. Trailing Altimeter Capital Management was Berkshire Hathaway, which amassed a stake valued at $1852.5 million. Tiger Global Management LLC, Coatue Management, and Melvin 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 Altimeter Capital Management allocated the biggest weight to Snowflake Inc (NYSE:SNOW), around 50.97% of its 13F portfolio. JS Capital is also relatively very bullish on the stock, dishing out 12.7 percent of its 13F equity portfolio to SNOW.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Tybourne Capital Management, managed by Eashwar Krishnan, created the most valuable position in Snowflake Inc (NYSE:SNOW). Tybourne Capital Management had $290.2 million invested in the company at the end of the quarter. George Yang’s Anatole Investment Management also initiated a $87.5 million position during the quarter. The other funds with brand new SNOW positions are Zach Schreiber’s Point State Capital, Joseph Samuels’s Islet Management, and Robert Smith’s Vista Equity Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Snowflake Inc (NYSE:SNOW) but similarly valued. These stocks are Anthem Inc (NYSE:ANTM), ConocoPhillips (NYSE:COP), Analog Devices, Inc. (NASDAQ:ADI), U.S. Bancorp (NYSE:USB), Gilead Sciences, Inc. (NASDAQ:GILD), PetroChina Company Limited (NYSE:PTR), and Automatic Data Processing (NASDAQ:ADP). All of these stocks’ market caps are similar to SNOW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ANTM | 59 | 4585560 | -8 |
| COP | 49 | 1371142 | -1 |
| ADI | 74 | 5698767 | 12 |
| USB | 42 | 8390873 | 1 |
| GILD | 55 | 1751615 | 1 |
| PTR | 7 | 94903 | -1 |
| ADP | 43 | 3616230 | 2 |
| Average | 47 | 3644156 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $3644 million. That figure was $14570 million in SNOW’s case. Analog Devices, Inc. (NASDAQ:ADI) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 7 bullish hedge fund positions. Snowflake Inc (NYSE:SNOW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SNOW is 87.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, SNOW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SNOW were disappointed as the stock returned -8.8% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
