Hedge Funds Have Never Been This Bullish On Fastly, Inc. (FSLY)

The Insider Monkey team has completed processing the quarterly 13F filings for the September 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 Fastly, Inc. (NYSE:FSLY).

Is Fastly, Inc. (NYSE:FSLY) an exceptional investment right now? The best stock pickers are turning bullish. The number of long hedge fund positions went up by 3 in recent months. Our calculations also showed that FSLY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). FSLY was in 16 hedge funds’ portfolios at the end of the third quarter of 2019. There were 13 hedge funds in our database with FSLY positions 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Chase Coleman Tiger Global Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the fresh hedge fund action encompassing Fastly, Inc. (NYSE:FSLY).

What does smart money think about Fastly, Inc. (NYSE:FSLY)?

Heading into the fourth quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FSLY over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is FSLY A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Abdiel Capital Advisors, managed by Colin Moran, holds the most valuable position in Fastly, Inc. (NYSE:FSLY). Abdiel Capital Advisors has a $93.5 million position in the stock, comprising 5.7% of its 13F portfolio. On Abdiel Capital Advisors’s heels is Chase Coleman of Tiger Global Management, with a $9.6 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions consist of Parvinder Thiara’s Athanor Capital, Richard Driehaus’s Driehaus Capital and Stanley Druckenmiller’s Duquesne Capital. In terms of the portfolio weights assigned to each position Abdiel Capital Advisors allocated the biggest weight to Fastly, Inc. (NYSE:FSLY), around 5.74% of its 13F portfolio. Tenzing Global Investors is also relatively very bullish on the stock, earmarking 0.46 percent of its 13F equity portfolio to FSLY.

As aggregate interest increased, key hedge funds have jumped into Fastly, Inc. (NYSE:FSLY) headfirst. Athanor Capital, managed by Parvinder Thiara, created the most valuable position in Fastly, Inc. (NYSE:FSLY). Athanor Capital had $4.5 million invested in the company at the end of the quarter. Stanley Druckenmiller’s Duquesne Capital also made a $2.7 million investment in the stock during the quarter. The following funds were also among the new FSLY investors: Sculptor Capital, David E. Shaw’s D E Shaw, and Chet Kapoor’s Tenzing Global Investors.

Let’s also examine hedge fund activity in other stocks similar to Fastly, Inc. (NYSE:FSLY). We will take a look at The Hain Celestial Group, Inc. (NASDAQ:HAIN), TeleTech Holdings, Inc. (NASDAQ:TTEC), Chart Industries, Inc. (NASDAQ:GTLS), and Sanmina Corporation (NASDAQ:SANM). This group of stocks’ market valuations are closest to FSLY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HAIN 19 545805 2
TTEC 14 41238 -3
GTLS 19 261236 -5
SANM 20 211992 2
Average 18 265068 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $265 million. That figure was $127 million in FSLY’s case. Sanmina Corporation (NASDAQ:SANM) is the most popular stock in this table. On the other hand TeleTech Holdings, Inc. (NASDAQ:TTEC) is the least popular one with only 14 bullish hedge fund positions. Fastly, Inc. (NYSE:FSLY) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately FSLY wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); FSLY investors were disappointed as the stock returned -15% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.

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