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Hedge Funds Have Never Been This Bullish On Elastic N.V. (ESTC)

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Elastic N.V. (NYSE:ESTC).

Is Elastic N.V. (NYSE:ESTC) ready to rally soon? Prominent investors are turning bullish. The number of long hedge fund positions advanced by 9 in recent months. Our calculations also showed that ESTC isn’t among the 30 most popular stocks among hedge funds (view the video below). ESTC was in 27 hedge funds’ portfolios at the end of June. There were 18 hedge funds in our database with ESTC holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

According to most investors, hedge funds are seen as worthless, old investment tools of years past. While there are greater than 8000 funds with their doors open at the moment, Our researchers look at the bigwigs of this club, around 750 funds. It is estimated that this group of investors administer bulk of all hedge funds’ total capital, and by tailing their best stock picks, Insider Monkey has unsheathed various investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

ESTS_oct2019

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. We’re going to analyze the key hedge fund action regarding Elastic N.V. (NYSE:ESTC).

What does smart money think about Elastic N.V. (NYSE:ESTC)?

Heading into the third quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in ESTC a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Brad Gerstner Altimeter Capital

Brad Gerstner of Altimeter Capital

Among these funds, Sylebra Capital Management held the most valuable stake in Elastic N.V. (NYSE:ESTC), which was worth $134.7 million at the end of the second quarter. On the second spot was Matrix Capital Management which amassed $56 million worth of shares. Moreover, Tiger Global Management LLC, Holocene Advisors, and Altimeter Capital Management were also bullish on Elastic N.V. (NYSE:ESTC), allocating a large percentage of their portfolios to this stock.

As aggregate interest increased, specific money managers have jumped into Elastic N.V. (NYSE:ESTC) headfirst. Holocene Advisors, managed by Brandon Haley, established the most valuable position in Elastic N.V. (NYSE:ESTC). Holocene Advisors had $36 million invested in the company at the end of the quarter. Peter S. Park’s Park West Asset Management also made a $12.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Spencer M. Waxman’s Shannon River Fund Management, and John Hurley’s Cavalry Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Elastic N.V. (NYSE:ESTC) but similarly valued. These stocks are Aluminum Corp. of China Limited (NYSE:ACH), Autoliv Inc. (NYSE:ALV), Zynga Inc (NASDAQ:ZNGA), and AECOM (NYSE:ACM). This group of stocks’ market valuations resemble ESTC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACH 5 5052 1
ALV 13 452441 0
ZNGA 48 1138396 13
ACM 22 599419 1
Average 22 548827 3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $549 million. That figure was $403 million in ESTC’s case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 5 bullish hedge fund positions. Elastic N.V. (NYSE:ESTC) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on ESTC as the stock returned 10.3% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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