Hedge Funds Have Never Been More Bullish On Mimecast Limited (MIME)

In this article you are going to find out whether hedge funds think Mimecast Limited (NASDAQ:MIME) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Mimecast Limited (NASDAQ:MIME) shareholders have witnessed an increase in hedge fund sentiment lately. Our calculations also showed that MIME 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According to most investors, hedge funds are seen as unimportant, outdated financial vehicles of years past. While there are over 8000 funds with their doors open today, We choose to focus on the aristocrats of this group, approximately 850 funds. Most estimates calculate that this group of people orchestrate the lion’s share of all hedge funds’ total asset base, and by shadowing their matchless investments, Insider Monkey has unsheathed various investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually 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 .

Colin Moran Abdiel Capital

Colin Moran of Abdiel Capital Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s review the recent hedge fund action encompassing Mimecast Limited (NASDAQ:MIME).

Hedge fund activity in Mimecast Limited (NASDAQ:MIME)

Heading into the second quarter of 2020, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from the previous quarter. On the other hand, there were a total of 35 hedge funds with a bullish position in MIME a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Alex Sacerdote’s Whale Rock Capital Management has the largest position in Mimecast Limited (NASDAQ:MIME), worth close to $124.9 million, accounting for 1.7% of its total 13F portfolio. The second most bullish fund manager is Abdiel Capital Advisors, managed by Colin Moran, which holds a $83.5 million position; 3.9% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish consist of Steve Cohen’s Point72 Asset Management, Dennis Puri and Oliver Keller’s Hunt Lane Capital and Amish Mehta’s SQN Investors. In terms of the portfolio weights assigned to each position North Run Capital allocated the biggest weight to Mimecast Limited (NASDAQ:MIME), around 9.31% of its 13F portfolio. Hunt Lane Capital is also relatively very bullish on the stock, setting aside 9.1 percent of its 13F equity portfolio to MIME.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Light Street Capital, managed by Glen Kacher, initiated the largest position in Mimecast Limited (NASDAQ:MIME). Light Street Capital had $14.7 million invested in the company at the end of the quarter. Mark Kingdon’s Kingdon Capital also made a $14 million investment in the stock during the quarter. The following funds were also among the new MIME investors: Michael Kahan and Jeremy Kahan’s North Peak Capital, Thomas Ellis and Todd Hammer’s North Run Capital, and Brian Bares’s Bares Capital Management.

Let’s check out hedge fund activity in other stocks similar to Mimecast Limited (NASDAQ:MIME). We will take a look at Stamps.com Inc. (NASDAQ:STMP), American National Insurance Company (NASDAQ:ANAT), Laureate Education, Inc. (NASDAQ:LAUR), and Macquarie Infrastructure Corporation (NYSE:MIC). This group of stocks’ market values match MIME’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STMP 29 465670 9
ANAT 14 48453 -2
LAUR 25 197669 -9
MIC 30 251515 -4
Average 24.5 240827 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $241 million. That figure was $517 million in MIME’s case. Macquarie Infrastructure Corporation (NYSE:MIC) is the most popular stock in this table. On the other hand American National Insurance Company (NASDAQ:ANAT) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Mimecast Limited (NASDAQ:MIME) is more popular among hedge funds. 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on MIME, though not to the same extent, as the stock returned 18.4% in Q2 (through the end of May) and outperformed the market as well.

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