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Hedge Funds Have Never Been This Bullish On Cyberark Software Ltd (CYBR)

The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Cyberark Software Ltd (NASDAQ:CYBR).

Is Cyberark Software Ltd (NASDAQ:CYBR) a buy, sell, or hold? Money managers are betting on the stock. The number of bullish hedge fund positions advanced by 8 in recent months. Our calculations also showed that CYBR isn’t among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Andrew Sandler

Let’s take a peek at the key hedge fund action surrounding Cyberark Software Ltd (NASDAQ:CYBR).

What have hedge funds been doing with Cyberark Software Ltd (NASDAQ:CYBR)?

At Q1’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in CYBR a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

CYBR_june2019

The largest stake in Cyberark Software Ltd (NASDAQ:CYBR) was held by Arrowstreet Capital, which reported holding $87.8 million worth of stock at the end of March. It was followed by RGM Capital with a $86.2 million position. Other investors bullish on the company included Two Sigma Advisors, Renaissance Technologies, and Citadel Investment Group.

Now, specific money managers have been driving this bullishness. Hitchwood Capital Management, managed by James Crichton, initiated the biggest position in Cyberark Software Ltd (NASDAQ:CYBR). Hitchwood Capital Management had $22 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $6.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Andrew Sandler’s Sandler Capital Management, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Cyberark Software Ltd (NASDAQ:CYBR) but similarly valued. These stocks are New Jersey Resources Corp (NYSE:NJR), Chegg Inc (NYSE:CHGG), Ingevity Corporation (NYSE:NGVT), and Methanex Corporation (NASDAQ:MEOH). This group of stocks’ market values resemble CYBR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NJR 11 96141 -7
CHGG 36 511609 15
NGVT 23 112069 6
MEOH 22 260832 1
Average 23 245163 3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $435 million in CYBR’s case. Chegg Inc (NYSE:CHGG) is the most popular stock in this table. On the other hand New Jersey Resources Corp (NYSE:NJR) is the least popular one with only 11 bullish hedge fund positions. Cyberark Software Ltd (NASDAQ:CYBR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on CYBR as the stock returned 11% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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