Hedge Funds Are Dumping Akamai Technologies, Inc. (AKAM)

In this article we will check out the progression of hedge fund sentiment towards Akamai Technologies, Inc. (NASDAQ:AKAM) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Akamai Technologies, Inc. (NASDAQ:AKAM) the right investment to pursue these days? Hedge funds were becoming less hopeful. The number of bullish hedge fund bets were trimmed by 8 recently. Akamai Technologies, Inc. (NASDAQ:AKAM) was in 25 hedge funds’ portfolios at the end of March. The all time high for this statistic is 40. Our calculations also showed that AKAM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 33 hedge funds in our database with AKAM holdings at the end of December.

At the moment there are many formulas stock market investors can use to evaluate stocks. A pair of the best formulas are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top money managers can beat the broader indices by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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 we’re going to check out the new hedge fund action encompassing Akamai Technologies, Inc. (NASDAQ:AKAM).

Do Hedge Funds Think AKAM Is A Good Stock To Buy Now?

At the end of March, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from the previous quarter. By comparison, 40 hedge funds held shares or bullish call options in AKAM 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, Citadel Investment Group was the largest shareholder of Akamai Technologies, Inc. (NASDAQ:AKAM), with a stake worth $58.3 million reported as of the end of March. Trailing Citadel Investment Group was Citadel Investment Group, which amassed a stake valued at $41.1 million. AQR Capital Management, Alyeska Investment Group, and Millennium 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 L2 Asset Management allocated the biggest weight to Akamai Technologies, Inc. (NASDAQ:AKAM), around 1.29% of its 13F portfolio. Fairpointe Capital is also relatively very bullish on the stock, setting aside 1.16 percent of its 13F equity portfolio to AKAM.

Seeing as Akamai Technologies, Inc. (NASDAQ:AKAM) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that slashed their positions entirely by the end of the first quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising close to $33.9 million in stock, and Robert Henry Lynch’s Aristeia Capital was right behind this move, as the fund sold off about $19.4 million worth. These moves are interesting, as total hedge fund interest dropped by 8 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Akamai Technologies, Inc. (NASDAQ:AKAM) but similarly valued. We will take a look at Cincinnati Financial Corporation (NASDAQ:CINF), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), Mid America Apartment Communities Inc (NYSE:MAA), ASE Technology Holding Co., Ltd. (NYSE:ASX), Penn National Gaming, Inc (NASDAQ:PENN), Nomura Holdings, Inc. (NYSE:NMR), and MongoDB, Inc. (NASDAQ:MDB). This group of stocks’ market valuations match AKAM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CINF 22 886358 2
ALNY 33 740380 -6
MAA 25 251877 -1
ASX 8 232071 -1
PENN 42 907475 1
NMR 10 19579 4
MDB 46 1540962 10
Average 26.6 654100 1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $654 million. That figure was $207 million in AKAM’s case. MongoDB, Inc. (NASDAQ:MDB) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 8 bullish hedge fund positions. Akamai Technologies, Inc. (NASDAQ:AKAM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AKAM is 38.1. 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 gained 24% in 2021 through July 9th and beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on AKAM, though not to the same extent, as the stock returned 15.7% since the end of Q1 (through July 9th) and outperformed the market.

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