Domo Inc. (DOMO): Hedge Funds In Wait-and-See Mode

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Domo Inc. (NASDAQ:DOMO).

Domo Inc. (NASDAQ:DOMO) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Diamond S Shipping Inc. (NYSE:DSSI), Penn Virginia Corporation (NASDAQ:PVAC), and SI-BONE, Inc. (NASDAQ:SIBN) to gather more data points. Our calculations also showed that DOMO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Atterbury - Whetstone Capital

David Atterbury of Whetstone Capital Advisors

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a gander at the latest hedge fund action surrounding Domo Inc. (NASDAQ:DOMO).

How have hedgies been trading Domo Inc. (NASDAQ:DOMO)?

At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in DOMO a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Daniel Patrick Gibson’s Sylebra Capital Management has the number one position in Domo Inc. (NASDAQ:DOMO), worth close to $43.3 million, accounting for 1.9% of its total 13F portfolio. Sitting at the No. 2 spot is David Atterbury of Whetstone Capital Advisors, with a $11.2 million position; 3% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish contain Dmitry Balyasny’s Balyasny Asset Management, Charles Davidson and Joseph Jacobs’s Wexford Capital and Dennis Puri and Oliver Keller’s Hunt Lane Capital. In terms of the portfolio weights assigned to each position Berylson Capital Partners allocated the biggest weight to Domo Inc. (NASDAQ:DOMO), around 3.87% of its 13F portfolio. Whetstone Capital Advisors is also relatively very bullish on the stock, setting aside 3.02 percent of its 13F equity portfolio to DOMO.

Judging by the fact that Domo Inc. (NASDAQ:DOMO) has faced a decline in interest from the smart money, logic holds that there was a specific group of hedgies that slashed their full holdings last quarter. It’s worth mentioning that Mark Coe’s Intrinsic Edge Capital dropped the biggest position of the 750 funds watched by Insider Monkey, valued at close to $5.5 million in stock. Israel Englander’s fund, Millennium Management, also dropped its stock, about $3.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Domo Inc. (NASDAQ:DOMO). We will take a look at Diamond S Shipping Inc. (NYSE:DSSI), Penn Virginia Corporation (NASDAQ:PVAC), SI-BONE, Inc. (NASDAQ:SIBN), and Maverix Metals Inc. (NYSE:MMX). This group of stocks’ market valuations match DOMO’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DSSI 15 138795 4
PVAC 16 183867 -1
SIBN 7 38943 -2
MMX 1 963 0
Average 9.75 90642 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $94 million in DOMO’s case. Penn Virginia Corporation (NASDAQ:PVAC) is the most popular stock in this table. On the other hand Maverix Metals Inc. (NYSE:MMX) is the least popular one with only 1 bullish hedge fund positions. Domo Inc. (NASDAQ:DOMO) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on DOMO as the stock returned 17.6% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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