How Did CommVault Systems, Inc. (CVLT) Perform In Comparison to Hedge Fund Favorites in 2019?

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained more than 57% each. Hedge funds’ top 3 stock picks returned 45.7% last year and beat the S&P 500 ETFs by 14.5 percentage points. That’s a big deal. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

CommVault Systems, Inc. (NASDAQ:CVLT) shareholders have witnessed an increase in hedge fund interest lately. Our calculations also showed that CVLT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

At the moment there are a multitude of signals stock traders put to use to evaluate stocks. Some of the most useful signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best money managers can beat the market by a solid margin (see the details here).

Jeffrey Bronchick - Cove Street Capital

Jeffrey Bronchick of Cove Street Capital

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. Now let’s take a look at the key hedge fund action regarding CommVault Systems, Inc. (NASDAQ:CVLT).

What have hedge funds been doing with CommVault Systems, Inc. (NASDAQ:CVLT)?

Heading into the fourth quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CVLT over the last 17 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

The largest stake in CommVault Systems, Inc. (NASDAQ:CVLT) was held by Renaissance Technologies, which reported holding $98.4 million worth of stock at the end of September. It was followed by D E Shaw with a $44.1 million position. Other investors bullish on the company included AQR Capital Management, Citadel Investment Group, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Cove Street Capital allocated the biggest weight to CommVault Systems, Inc. (NASDAQ:CVLT), around 1.85% of its 13F portfolio. Freshford Capital Management is also relatively very bullish on the stock, setting aside 1.23 percent of its 13F equity portfolio to CVLT.

As aggregate interest increased, key money managers have been driving this bullishness. Cove Street Capital, managed by Jeffrey Bronchick, created the most outsized position in CommVault Systems, Inc. (NASDAQ:CVLT). Cove Street Capital had $13.2 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $9.6 million position during the quarter. The following funds were also among the new CVLT investors: Michael Doheny’s Freshford Capital Management, Sander Gerber’s Hudson Bay Capital Management, and Minhua Zhang’s Weld Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as CommVault Systems, Inc. (NASDAQ:CVLT) but similarly valued. These stocks are Tellurian Inc. (NASDAQ:TELL), Cambrex Corporation (NYSE:CBM), Kontoor Brands, Inc. (NYSE:KTB), and Acushnet Holdings Corp. (NYSE:GOLF). All of these stocks’ market caps match CVLT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TELL 14 52629 5
CBM 17 153556 5
KTB 21 70588 8
GOLF 12 21329 1
Average 16 74526 4.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $297 million in CVLT’s case. Kontoor Brands, Inc. (NYSE:KTB) is the most popular stock in this table. On the other hand Acushnet Holdings Corp. (NYSE:GOLF) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks CommVault Systems, Inc. (NASDAQ:CVLT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately CVLT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CVLT were disappointed as the stock returned -24.5% in 2019 and trailed 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 65 percent of these stocks outperformed the market in 2019.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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