While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and optimism towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the first quarter and hedging or reducing many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Tableau Software Inc (NYSE:DATA).
Tableau Software Inc (NYSE:DATA) was in 44 hedge funds’ portfolios at the end of March. DATA shareholders have witnessed an increase in hedge fund interest of late. There were 36 hedge funds in our database with DATA positions at the end of the previous quarter. Our calculations also showed that data isn’t among the 30 most popular stocks among hedge funds.
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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Lowenstein of Kensico Capital
Let’s view the new hedge fund action surrounding Tableau Software Inc (NYSE:DATA).
How have hedgies been trading Tableau Software Inc (NYSE:DATA)?
At Q1’s end, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. On the other hand, there were a total of 32 hedge funds with a bullish position in DATA a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Matrix Capital Management held the most valuable stake in Tableau Software Inc (NYSE:DATA), which was worth $486.8 million at the end of the first quarter. On the second spot was Altimeter Capital Management which amassed $415.8 million worth of shares. Moreover, Coatue Management, Kensico Capital, and HMI Capital were also bullish on Tableau Software Inc (NYSE:DATA), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, some big names were breaking ground themselves. Duquesne Capital, managed by Stanley Druckenmiller, created the largest position in Tableau Software Inc (NYSE:DATA). Duquesne Capital had $23.3 million invested in the company at the end of the quarter. Seth Wunder’s Black-and-White Capital also made a $19.1 million investment in the stock during the quarter. The following funds were also among the new DATA investors: Jay Genzer’s Thames Capital Management, Matthew Hulsizer’s PEAK6 Capital Management, and Seth Wunder’s Black-and-White Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Tableau Software Inc (NYSE:DATA). These stocks are PTC Inc (NASDAQ:PTC), EXACT Sciences Corporation (NASDAQ:EXAS), EnCana Corporation (NYSE:ECA), and Steris Plc (NYSE:STE). This group of stocks’ market values are closest to DATA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PTC | 25 | 1387214 | -6 |
| EXAS | 33 | 814522 | 3 |
| ECA | 44 | 1002031 | 4 |
| STE | 21 | 319546 | -1 |
| Average | 30.75 | 880828 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $881 million. That figure was $2282 million in DATA’s case. EnCana Corporation (NYSE:ECA) is the most popular stock in this table. On the other hand Steris Plc (NYSE:STE) is the least popular one with only 21 bullish hedge fund positions. Tableau Software Inc (NYSE:DATA) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately DATA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on DATA were disappointed as the stock returned -11.2% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
