Is PagerDuty, Inc. (NYSE:PD) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
PagerDuty, Inc. (NYSE:PD) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that PD isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the latest hedge fund action encompassing PagerDuty, Inc. (NYSE:PD).
What does smart money think about PagerDuty, Inc. (NYSE:PD)?
At the end of the second quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22 from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PD over the last 16 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Millennium Management held the most valuable stake in PagerDuty, Inc. (NYSE:PD), which was worth $13.9 million at the end of the second quarter. On the second spot was HBK Investments which amassed $9.4 million worth of shares. Moreover, Ratan Capital Group, Tiger Global Management LLC, and Citadel Investment Group were also bullish on PagerDuty, Inc. (NYSE:PD), allocating a large percentage of their portfolios to this stock.
Now, specific money managers have jumped into PagerDuty, Inc. (NYSE:PD) headfirst. Millennium Management, managed by Israel Englander, initiated the most valuable position in PagerDuty, Inc. (NYSE:PD). Millennium Management had $13.9 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $9.4 million position during the quarter. The other funds with brand new PD positions are Nehal Chopra’s Ratan Capital Group, Chase Coleman’s Tiger Global Management LLC, and Ken Griffin’s Citadel Investment Group.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as PagerDuty, Inc. (NYSE:PD) but similarly valued. These stocks are AppFolio Inc (NASDAQ:APPF), LivaNova PLC (NASDAQ:LIVN), PBF Energy Inc (NYSE:PBF), and Glacier Bancorp, Inc. (NASDAQ:GBCI). All of these stocks’ market caps are closest to PD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APPF | 12 | 264675 | -3 |
| LIVN | 16 | 183188 | -4 |
| PBF | 26 | 358655 | 4 |
| GBCI | 17 | 63296 | 5 |
| Average | 17.75 | 217454 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $68 million in PD’s case. PBF Energy Inc (NYSE:PBF) is the most popular stock in this table. On the other hand AppFolio Inc (NASDAQ:APPF) is the least popular one with only 12 bullish hedge fund positions. PagerDuty, Inc. (NYSE:PD) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately PD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PD were disappointed as the stock returned -40% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.