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

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31, so let’s proceed with the discussion of the hedge fund sentiment on Mimecast Limited (NASDAQ:MIME).

Mimecast Limited (NASDAQ:MIME) investors should pay attention to an increase in hedge fund sentiment in recent months. MIME was in 35 hedge funds’ portfolios at the end of March. There were 23 hedge funds in our database with MIME positions at the end of the previous quarter. Our calculations also showed that MIME isn’t among the 30 most popular stocks among hedge funds.

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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Colin Moran Abdiel Capital

We’re going to take a peek at the latest hedge fund action regarding Mimecast Limited (NASDAQ:MIME).

What have hedge funds been doing with Mimecast Limited (NASDAQ:MIME)?

Heading into the second quarter of 2019, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 52% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in MIME a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

MIME_jun2019

More specifically, Abdiel Capital Advisors was the largest shareholder of Mimecast Limited (NASDAQ:MIME), with a stake worth $203.9 million reported as of the end of March. Trailing Abdiel Capital Advisors was Whale Rock Capital Management, which amassed a stake valued at $94.3 million. Renaissance Technologies, Holocene Advisors, and SQN Investors were also very fond of the stock, giving the stock large weights in their portfolios.

As industrywide interest jumped, specific money managers were breaking ground themselves. Holocene Advisors, managed by Brandon Haley, initiated the largest position in Mimecast Limited (NASDAQ:MIME). Holocene Advisors had $48.6 million invested in the company at the end of the quarter. Amish Mehta’s SQN Investors also initiated a $48.1 million position during the quarter. The other funds with brand new MIME positions are Dennis Puri and Oliver Keller’s Hunt Lane Capital, Richard Driehaus’s Driehaus Capital, and Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali’s Alta Park Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mimecast Limited (NASDAQ:MIME) but similarly valued. These stocks are Chart Industries, Inc. (NASDAQ:GTLS), Genesis Energy, L.P. (NYSE:GEL), Valmont Industries, Inc. (NYSE:VMI), and Holly Energy Partners, L.P. (NYSE:HEP). All of these stocks’ market caps are closest to MIME’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GTLS 20 267307 5
GEL 3 22495 -2
VMI 19 234638 1
HEP 4 2658 2
Average 11.5 131775 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $771 million in MIME’s case. Chart Industries, Inc. (NASDAQ:GTLS) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Mimecast Limited (NASDAQ:MIME) is more popular among hedge funds. 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. Unfortunately MIME wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MIME were disappointed as the stock returned -1.5% during the same period 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 13 of these stocks already outperformed the market in Q2.

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

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