Hedge Funds Keep Buying Tenable Holdings, Inc. (TENB)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Tenable Holdings, Inc. (NASDAQ:TENB) based on that data.

Tenable Holdings, Inc. (NASDAQ:TENB) shareholders have witnessed an increase in hedge fund sentiment lately. Our calculations also showed that TENB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: 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 S&P 500 ETFs by 58 percentage points since March 2017 (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.

Robert Moses RGM Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the fresh hedge fund action encompassing Tenable Holdings, Inc. (NASDAQ:TENB).

How are hedge funds trading Tenable Holdings, Inc. (NASDAQ:TENB)?

At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards TENB over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

Is TENB A Good Stock To Buy?

The largest stake in Tenable Holdings, Inc. (NASDAQ:TENB) was held by Sylebra Capital Management, which reported holding $74.2 million worth of stock at the end of September. It was followed by Greenvale Capital with a $66.4 million position. Other investors bullish on the company included D E Shaw, RGM Capital, and Diker Management. In terms of the portfolio weights assigned to each position Greenvale Capital allocated the biggest weight to Tenable Holdings, Inc. (NASDAQ:TENB), around 17.45% of its 13F portfolio. Sylebra Capital Management is also relatively very bullish on the stock, designating 3.04 percent of its 13F equity portfolio to TENB.

Now, some big names were breaking ground themselves. RGM Capital, managed by Robert G. Moses, assembled the most outsized position in Tenable Holdings, Inc. (NASDAQ:TENB). RGM Capital had $24.4 million invested in the company at the end of the quarter. Mark N. Diker’s Diker Management also made a $5.3 million investment in the stock during the quarter. The other funds with brand new TENB positions are Frederick DiSanto’s Ancora Advisors, Sander Gerber’s Hudson Bay Capital Management, and Greg Eisner’s Engineers Gate Manager.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Tenable Holdings, Inc. (NASDAQ:TENB) but similarly valued. We will take a look at iRhythm Technologies, Inc. (NASDAQ:IRTC), The Howard Hughes Corporation (NYSE:HHC), MGIC Investment Corporation (NYSE:MTG), and Bank OZK (NASDAQ:OZK). All of these stocks’ market caps resemble TENB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IRTC 15 176679 -7
HHC 24 792280 -1
MTG 41 268781 4
OZK 25 146154 0
Average 26.25 345974 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $346 million. That figure was $237 million in TENB’s case. MGIC Investment Corporation (NYSE:MTG) is the most popular stock in this table. On the other hand iRhythm Technologies, Inc. (NASDAQ:IRTC) is the least popular one with only 15 bullish hedge fund positions. Tenable Holdings, Inc. (NASDAQ:TENB) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on TENB as the stock returned 34.8% during the second quarter and outperformed the market by an even larger margin.

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