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 Medallia, Inc. (NYSE:MDLA) based on that data.
Is Medallia, Inc. (NYSE:MDLA) an attractive stock to buy now? Investors who are in the know are reducing their bets on the stock. The number of long hedge fund positions fell by 2 lately. Our calculations also showed that MDLA 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). MDLA was in 20 hedge funds’ portfolios at the end of the first quarter of 2020. There were 22 hedge funds in our database with MDLA positions at the end of the previous quarter.
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.
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 we’re going to view the latest hedge fund action regarding Medallia, Inc. (NYSE:MDLA).
What have hedge funds been doing with Medallia, Inc. (NYSE:MDLA)?
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in MDLA a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Medallia, Inc. (NYSE:MDLA) was held by SCGE Management, which reported holding $82.1 million worth of stock at the end of September. It was followed by Lone Pine Capital with a $37.1 million position. Other investors bullish on the company included RGM Capital, Polar Capital, and Platinum Asset Management. In terms of the portfolio weights assigned to each position SCGE Management allocated the biggest weight to Medallia, Inc. (NYSE:MDLA), around 2.58% of its 13F portfolio. RGM Capital is also relatively very bullish on the stock, designating 2.56 percent of its 13F equity portfolio to MDLA.
Since Medallia, Inc. (NYSE:MDLA) has faced a decline in interest from the smart money, it’s safe to say that there were a few fund managers that decided to sell off their entire stakes by the end of the first quarter. Interestingly, Noam Gottesman’s GLG Partners cut the largest stake of the “upper crust” of funds monitored by Insider Monkey, valued at about $1.7 million in stock, and Josh Goldberg’s G2 Investment Partners Management was right behind this move, as the fund dropped about $1.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds by the end of the first quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Medallia, Inc. (NYSE:MDLA) but similarly valued. We will take a look at PVH Corp (NYSE:PVH), Cannae Holdings, Inc. (NYSE:CNNE), Devon Energy Corporation (NYSE:DVN), and Nexstar Media Group, Inc. (NASDAQ:NXST). All of these stocks’ market caps are similar to MDLA’s market cap.
|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 30.25 hedge funds with bullish positions and the average amount invested in these stocks was $368 million. That figure was $238 million in MDLA’s case. Devon Energy Corporation (NYSE:DVN) is the most popular stock in this table. On the other hand PVH Corp (NYSE:PVH) is the least popular one with only 18 bullish hedge fund positions. Medallia, Inc. (NYSE:MDLA) 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 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on MDLA as the stock returned 35.9% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.