The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Coupa Software Incorporated (NASDAQ:COUP) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Coupa Software Incorporated (NASDAQ:COUP) has seen a decrease in enthusiasm from smart money recently. Coupa Software Incorporated (NASDAQ:COUP) was in 50 hedge funds’ portfolios at the end of the second quarter of 2020. Our calculations also showed that COUP isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now let’s take a peek at the key hedge fund action regarding Coupa Software Incorporated (NASDAQ:COUP).
How have hedgies been trading Coupa Software Incorporated (NASDAQ:COUP)?
Heading into the third quarter of 2020, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from the previous quarter. The graph below displays the number of hedge funds with bullish position in COUP over the last 20 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Lone Pine Capital held the most valuable stake in Coupa Software Incorporated (NASDAQ:COUP), which was worth $588.5 million at the end of the third quarter. On the second spot was Alkeon Capital Management which amassed $501 million worth of shares. Whale Rock Capital Management, Sylebra Capital Management, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Center Lake Capital allocated the biggest weight to Coupa Software Incorporated (NASDAQ:COUP), around 19.9% of its 13F portfolio. Crosslink Capital is also relatively very bullish on the stock, designating 15.71 percent of its 13F equity portfolio to COUP.
Since Coupa Software Incorporated (NASDAQ:COUP) has faced falling interest from the aggregate hedge fund industry, it’s safe to say that there is a sect of money managers that elected to cut their positions entirely last quarter. It’s worth mentioning that Robert Pitts’s Steadfast Capital Management dumped the biggest investment of all the hedgies monitored by Insider Monkey, valued at about $120.5 million in stock, and Christopher Lyle’s SCGE Management was right behind this move, as the fund sold off about $110.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 16 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Coupa Software Incorporated (NASDAQ:COUP) but similarly valued. We will take a look at Royal Bank of Scotland Group plc (NYSE:RBS), Arthur J. Gallagher & Co. (NYSE:AJG), Ameriprise Financial, Inc. (NYSE:AMP), MPLX LP (NYSE:MPLX), Nutrien Ltd. (NYSE:NTR), Citrix Systems, Inc. (NASDAQ:CTXS), and First Republic Bank (NYSE:FRC). This group of stocks’ market valuations are closest to COUP’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.3 hedge funds with bullish positions and the average amount invested in these stocks was $565 million. That figure was $3003 million in COUP’s case. First Republic Bank (NYSE:FRC) is the most popular stock in this table. On the other hand Royal Bank of Scotland Group plc (NYSE:RBS) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Coupa Software Incorporated (NASDAQ:COUP) is more popular among hedge funds. Our overall hedge fund sentiment score for COUP is 64.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 33% in 2020 through the end of August and still managed to beat the market by 23.2 percentage points. Hedge funds were also right about betting on COUP, though not to the same extent, as the stock returned 18.3% since the end of June and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.