Hedge Funds Can’t Stop Buying CrowdStrike Holdings (CRWD)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought CrowdStrike Holdings, Inc. (NASDAQ:CRWD) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Is CrowdStrike Holdings, Inc. (NASDAQ:CRWD) a buy, sell, or hold? Investors who are in the know were taking an optimistic view. The number of long hedge fund bets inched up by 13 lately. Our calculations also showed that CRWD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).CrowdStrike Holdings, Inc. (NASDAQ:CRWD) was in 78 hedge funds’ portfolios at the end of June. The all time high for this statistics is 65. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 65 hedge funds in our database with CRWD positions at the end of the previous quarter.

Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Louis Bacon of Moore Global Investments

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Currently, investors are pessimistic about commercial real estate investments. So, we are checking out this contrarian play to diversify our market exposure. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to go over the key hedge fund action encompassing CrowdStrike Holdings, Inc. (NASDAQ:CRWD).

What have hedge funds been doing with CrowdStrike Holdings, Inc. (NASDAQ:CRWD)?

At Q2’s end, a total of 78 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. On the other hand, there were a total of 41 hedge funds with a bullish position in CRWD a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Among these funds, Tiger Global Management LLC held the most valuable stake in CrowdStrike Holdings, Inc. (NASDAQ:CRWD), which was worth $505.7 million at the end of the third quarter. On the second spot was Coatue Management which amassed $444.3 million worth of shares. Matrix Capital Management, Whale Rock Capital Management, and Renaissance Technologies 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 Totem Point Management allocated the biggest weight to CrowdStrike Holdings, Inc. (NASDAQ:CRWD), around 8.18% of its 13F portfolio. DSAM Partners is also relatively very bullish on the stock, setting aside 5.34 percent of its 13F equity portfolio to CRWD.

Now, key hedge funds were leading the bulls’ herd. Moore Global Investments, managed by Louis Bacon, initiated the most outsized position in CrowdStrike Holdings, Inc. (NASDAQ:CRWD). Moore Global Investments had $45.3 million invested in the company at the end of the quarter. John Hurley’s Cavalry Asset Management also made a $25.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Stuart J. Zimmer’s Zimmer Partners, Josh Donfeld and David Rogers’s Castle Hook Partners, and Neal Nathani and Darren Dinneen’s Totem Point Management.

Let’s now take a look at hedge fund activity in other stocks similar to CrowdStrike Holdings, Inc. (NASDAQ:CRWD). We will take a look at Align Technology, Inc. (NASDAQ:ALGN), Welltower Inc. (NYSE:WELL), Sun Life Financial Inc. (NYSE:SLF), Stanley Black & Decker, Inc. (NYSE:SWK), Skyworks Solutions Inc (NASDAQ:SWKS), Trane Technologies plc (NYSE:TT), and TELUS Corporation (NYSE:TU). This group of stocks’ market valuations resemble CRWD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALGN 41 1960739 2
WELL 27 655260 2
SLF 14 85306 -2
SWK 33 807322 -3
SWKS 49 993689 20
TT 40 730073 4
TU 15 194956 0
Average 31.3 775335 3.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.3 hedge funds with bullish positions and the average amount invested in these stocks was $775 million. That figure was $3278 million in CRWD’s case. Skyworks Solutions Inc (NASDAQ:SWKS) is the most popular stock in this table. On the other hand Sun Life Financial Inc. (NYSE:SLF) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is more popular among hedge funds. Our overall hedge fund sentiment score for CRWD 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 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 28.2% in 2020 through August 24th and still beat the market by 20.6 percentage points. Unfortunately CRWD wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CRWD were disappointed as the stock returned 10.9% since the end of the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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