Hedge Funds Are Cashing Out Of Twilio Inc. (TWLO)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Twilio Inc. (NYSE:TWLO) based on that data.

Is Twilio Inc. (NYSE:TWLO) going to take off soon? Money managers are in a bearish mood. The number of long hedge fund positions were trimmed by 8 in recent months. Our calculations also showed that TWLO 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.

According to most shareholders, hedge funds are assumed to be slow, old financial vehicles of the past. While there are greater than 8000 funds trading at the moment, We choose to focus on the moguls of this club, about 850 funds. These money managers command the majority of the smart money’s total capital, and by observing their finest stock picks, Insider Monkey has spotted a few investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Chase Coleman of Tiger Global

At Insider Monkey we leave no stone unturned when looking for the next great investment idea.  For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the fresh hedge fund action surrounding Twilio Inc. (NYSE:TWLO).

What have hedge funds been doing with Twilio Inc. (NYSE:TWLO)?

At the end of the first quarter, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. By comparison, 59 hedge funds held shares or bullish call options in TWLO a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, SCGE Management was the largest shareholder of Twilio Inc. (NYSE:TWLO), with a stake worth $249.1 million reported as of the end of September. Trailing SCGE Management was Foxhaven Asset Management, which amassed a stake valued at $242.9 million. Generation Investment Management, Tiger Global Management LLC, and Whale Rock 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 Foxhaven Asset Management allocated the biggest weight to Twilio Inc. (NYSE:TWLO), around 13.01% of its 13F portfolio. Toronado Partners is also relatively very bullish on the stock, designating 10.32 percent of its 13F equity portfolio to TWLO.

Due to the fact that Twilio Inc. (NYSE:TWLO) has faced declining sentiment from the smart money, it’s easy to see that there was a specific group of hedgies that slashed their entire stakes heading into Q4. It’s worth mentioning that Eashwar Krishnan’s Tybourne Capital Management said goodbye to the largest stake of the 750 funds followed by Insider Monkey, totaling close to $323.3 million in stock. David Gallo’s fund, Valinor Management LLC, also dropped its stock, about $55.6 million worth. These moves are important to note, as aggregate hedge fund interest fell by 8 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to Twilio Inc. (NYSE:TWLO). We will take a look at TransUnion (NYSE:TRU), Evergy, Inc. (NYSE:EVRG), D.R. Horton, Inc. (NYSE:DHI), and Western Digital Corporation (NASDAQ:WDC). This group of stocks’ market valuations are similar to TWLO’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TRU 44 895453 7
EVRG 30 757141 5
DHI 65 1265515 14
WDC 45 560147 -4
Average 46 869564 5.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 46 hedge funds with bullish positions and the average amount invested in these stocks was $870 million. That figure was $1550 million in TWLO’s case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand Evergy, Inc. (NYSE:EVRG) is the least popular one with only 30 bullish hedge fund positions. Twilio Inc. (NYSE:TWLO) is not the most popular stock in this group but hedge fund interest is still above 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 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on TWLO as the stock returned 133.1% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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