Here is What Hedge Funds Think About JFrog Ltd. (FROG)

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards JFrog Ltd. (NASDAQ:FROG) changed recently.

JFrog Ltd. (NASDAQ:FROG) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. JFrog Ltd. (NASDAQ:FROG) was in 20 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 22. There were 16 hedge funds in our database with FROG positions at the end of the fourth quarter. Our calculations also showed that FROG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Chase Coleman of Tiger Global

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a look at the key hedge fund action encompassing JFrog Ltd. (NASDAQ:FROG).

Do Hedge Funds Think FROG Is A Good Stock To Buy Now?

At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FROG over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Ashe Capital held the most valuable stake in JFrog Ltd. (NASDAQ:FROG), which was worth $106.5 million at the end of the fourth quarter. On the second spot was Alkeon Capital Management which amassed $57.9 million worth of shares. Tiger Global Management LLC, Citadel Investment Group, and Holocene Advisors 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 Ashe Capital allocated the biggest weight to JFrog Ltd. (NASDAQ:FROG), around 7.27% of its 13F portfolio. Stepstone Group is also relatively very bullish on the stock, designating 4.86 percent of its 13F equity portfolio to FROG.

As aggregate interest increased, key money managers were breaking ground themselves. ARK Investment Management, managed by Catherine D. Wood, created the largest position in JFrog Ltd. (NASDAQ:FROG). ARK Investment Management had $4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $2.4 million investment in the stock during the quarter. The other funds with brand new FROG positions are Greg Eisner’s Engineers Gate Manager, Jinghua Yan’s TwinBeech Capital, and Israel Englander’s Millennium Management.

Let’s now review hedge fund activity in other stocks similar to JFrog Ltd. (NASDAQ:FROG). We will take a look at Covetrus, Inc. (NASDAQ:CVET), BankUnited Inc (NYSE:BKU), Ryder System, Inc. (NYSE:R), F.N.B. Corp (NYSE:FNB), Balchem Corporation (NASDAQ:BCPC), Atlantica Sustainable Infrastructure plc (NASDAQ:AY), and iRhythm Technologies, Inc. (NASDAQ:IRTC). All of these stocks’ market caps match FROG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CVET 17 143072 -2
BKU 9 135009 -2
R 20 358550 3
FNB 16 55214 -3
BCPC 14 43987 1
AY 13 42815 -1
IRTC 19 153258 0
Average 15.4 133129 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $235 million in FROG’s case. Ryder System, Inc. (NYSE:R) is the most popular stock in this table. On the other hand BankUnited Inc (NYSE:BKU) is the least popular one with only 9 bullish hedge fund positions. JFrog Ltd. (NASDAQ:FROG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FROG is 86.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately FROG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FROG were disappointed as the stock returned -2.1% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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