Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Ping Identity Holding Corp. (NYSE:PING)? The smart money sentiment can provide an answer to this question.
Ping Identity Holding Corp. (NYSE:PING) was in 23 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. PING shareholders have witnessed an increase in enthusiasm from smart money lately. There were 11 hedge funds in our database with PING positions at the end of the first quarter. Our calculations also showed that PING isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Steven Cohen of Point72 Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s view the key hedge fund action regarding Ping Identity Holding Corp. (NYSE:PING).
Do Hedge Funds Think PING Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 109% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PING over the last 24 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Vista Equity Partners held the most valuable stake in Ping Identity Holding Corp. (NYSE:PING), which was worth $612.2 million at the end of the second quarter. On the second spot was Tremblant Capital which amassed $76.9 million worth of shares. Point72 Asset Management, CaaS Capital, and Citadel Investment Group 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 Vista Equity Partners allocated the biggest weight to Ping Identity Holding Corp. (NYSE:PING), around 6.53% of its 13F portfolio. Pinz Capital is also relatively very bullish on the stock, setting aside 2.3 percent of its 13F equity portfolio to PING.
Now, some big names have been driving this bullishness. Tremblant Capital, managed by Brett Barakett, assembled the most valuable position in Ping Identity Holding Corp. (NYSE:PING). Tremblant Capital had $76.9 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $27.6 million investment in the stock during the quarter. The following funds were also among the new PING investors: Frank Fu’s CaaS Capital, Matthew L Pinz’s Pinz Capital, and Chris Rokos’s Rokos Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Ping Identity Holding Corp. (NYSE:PING) but similarly valued. These stocks are Euronav NV (NYSE:EURN), Strategic Education Inc (NASDAQ:STRA), Patterson-UTI Energy, Inc. (NASDAQ:PTEN), Columbia Financial, Inc. (NASDAQ:CLBK), PubMatic, Inc. (NASDAQ:PUBM), Lantheus Holdings Inc (NASDAQ:LNTH), and Porch Group, Inc. (NASDAQ:PRCH). This group of stocks’ market values are closest to PING’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EURN | 17 | 100681 | 0 |
| STRA | 13 | 170208 | -3 |
| PTEN | 18 | 151380 | 3 |
| CLBK | 11 | 49724 | 3 |
| PUBM | 10 | 87178 | 5 |
| LNTH | 18 | 175478 | 3 |
| PRCH | 18 | 359741 | -9 |
| Average | 15 | 156341 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $156 million. That figure was $785 million in PING’s case. Patterson-UTI Energy, Inc. (NASDAQ:PTEN) is the most popular stock in this table. On the other hand PubMatic, Inc. (NASDAQ:PUBM) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Ping Identity Holding Corp. (NYSE:PING) is more popular among hedge funds. Our overall hedge fund sentiment score for PING is 90. 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 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 returned 24% in 2021 through October 22nd but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on PING as the stock returned 22.2% since the end of June (through 10/22) 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.
Follow Ping Identity Holding Corp. (NYSE:PING)
Follow Ping Identity Holding Corp. (NYSE:PING)
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Disclosure: None. This article was originally published at Insider Monkey.
