Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Zendesk Inc (NYSE:ZEN) in this article.
Is Zendesk Inc (NYSE:ZEN) an attractive investment today? The best stock pickers were becoming more confident. The number of long hedge fund bets went up by 1 in recent months. Zendesk Inc (NYSE:ZEN) was in 53 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 63. Our calculations also showed that ZEN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s view the key hedge fund action encompassing Zendesk Inc (NYSE:ZEN).
Tim Woolley of Polar Capital
Do Hedge Funds Think ZEN Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 53 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the second quarter of 2021. By comparison, 59 hedge funds held shares or bullish call options in ZEN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Whale Rock Capital Management was the largest shareholder of Zendesk Inc (NYSE:ZEN), with a stake worth $191.6 million reported as of the end of September. Trailing Whale Rock Capital Management was Cadian Capital, which amassed a stake valued at $165.1 million. Polar Capital, Citadel Investment Group, and Point72 Asset Management 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 Hunt Lane Capital allocated the biggest weight to Zendesk Inc (NYSE:ZEN), around 10.54% of its 13F portfolio. Toronado Partners is also relatively very bullish on the stock, designating 8.56 percent of its 13F equity portfolio to ZEN.
As industrywide interest jumped, key money managers have been driving this bullishness. Tremblant Capital, managed by Brett Barakett, established the most valuable call position in Zendesk Inc (NYSE:ZEN). Tremblant Capital had $94.4 million invested in the company at the end of the quarter. Glen Kacher’s Light Street Capital also made a $61.3 million investment in the stock during the quarter. The following funds were also among the new ZEN investors: Gregg Moskowitz’s Interval Partners, Noam Gottesman’s GLG Partners, and Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund.
Let’s check out hedge fund activity in other stocks similar to Zendesk Inc (NYSE:ZEN). We will take a look at News Corp (NASDAQ:NWSA), Loews Corporation (NYSE:L), Solaredge Technologies Inc (NASDAQ:SEDG), Nordson Corporation (NASDAQ:NDSN), W.P. Carey Inc. (NYSE:WPC), Lightspeed Commerce Inc. (NYSE:LSPD), and Masco Corporation (NYSE:MAS). This group of stocks’ market caps match ZEN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NWSA | 34 | 737689 | -3 |
| L | 27 | 175121 | -1 |
| SEDG | 33 | 594467 | -4 |
| NDSN | 29 | 310857 | -5 |
| WPC | 24 | 142763 | -5 |
| LSPD | 26 | 631903 | -3 |
| MAS | 29 | 528895 | -6 |
| Average | 28.9 | 445956 | -3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $446 million. That figure was $1558 million in ZEN’s case. News Corp (NASDAQ:NWSA) is the most popular stock in this table. On the other hand W.P. Carey Inc. (NYSE:WPC) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Zendesk Inc (NYSE:ZEN) is more popular among hedge funds. Our overall hedge fund sentiment score for ZEN is 81.2. 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 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately ZEN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ZEN were disappointed as the stock returned -12.3% since the end of the third quarter (through 11/30) 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 most of these stocks already outperformed the market since 2019.
Follow Zendesk Inc. (NYSE:ZEN)
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Disclosure: None. This article was originally published at Insider Monkey.
