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Hedge Funds Have Never Been This Bullish On CrowdStrike Holdings, Inc. (CRWD)

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was CrowdStrike Holdings, Inc. (NASDAQ:CRWD).

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) has seen an increase in hedge fund sentiment recently. Our calculations also showed that CRWD isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.

Chase Coleman Tiger Global

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a peek at the new hedge fund action encompassing CrowdStrike Holdings, Inc. (NASDAQ:CRWD).

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

At the end of the second quarter, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 41 from the previous quarter. The graph below displays the number of hedge funds with bullish position in CRWD over the last 16 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CRWD_oct2019

More specifically, Jericho Capital Asset Management was the largest shareholder of CrowdStrike Holdings, Inc. (NASDAQ:CRWD), with a stake worth $54.8 million reported as of the end of March. Trailing Jericho Capital Asset Management was Whale Rock Capital Management, which amassed a stake valued at $48.3 million. Millennium Management, Citadel Investment Group, and Tiger Global Management LLC were also very fond of the stock, giving the stock large weights in their portfolios.

Consequently, key money managers have jumped into CrowdStrike Holdings, Inc. (NASDAQ:CRWD) headfirst. Jericho Capital Asset Management, managed by Josh Resnick, established the biggest position in CrowdStrike Holdings, Inc. (NASDAQ:CRWD). Jericho Capital Asset Management had $54.8 million invested in the company at the end of the quarter. Alex Sacerdote’s Whale Rock Capital Management also made a $48.3 million investment in the stock during the quarter. The other funds with brand new CRWD positions are Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group, and Chase Coleman’s Tiger Global Management LLC.

Let’s go over hedge fund activity in other stocks similar to CrowdStrike Holdings, Inc. (NASDAQ:CRWD). We will take a look at Skyworks Solutions Inc (NASDAQ:SWKS), Brookfield Property REIT Inc. (NASDAQ:BPR), CNH Industrial NV (NYSE:CNHI), and Western Midstream Partners, LP (NYSE:WES). This group of stocks’ market values match CRWD’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SWKS 31 734317 -7
BPR 16 62007 1
CNHI 14 353927 -9
WES 9 159285 1
Average 17.5 327384 -3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $327 million. That figure was $344 million in CRWD’s case. Skyworks Solutions Inc (NASDAQ:SWKS) is the most popular stock in this table. On the other hand Western Midstream Partners, LP (NYSE:WES) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CRWD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CRWD were disappointed as the stock returned -14.6% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.

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

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