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How Did MongoDB, Inc. (MDB) Compare Against Top Hedge Fund Stocks in 2019?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about MongoDB, Inc. (NASDAQ:MDB) and compare its performance to hedge funds’ consensus picks in 2019.

Is MongoDB, Inc. (NASDAQ:MDB) the right investment to pursue these days? Prominent investors are in a bearish mood. The number of long hedge fund positions dropped by 5 recently. Our calculations also showed that MDB 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). MDB was in 29 hedge funds’ portfolios at the end of September. There were 34 hedge funds in our database with MDB holdings at the end of the previous quarter.

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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Brad Gerstner Altimeter Capital

Brad Gerstner of Altimeter 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 we’re going to take a look at the recent hedge fund action regarding MongoDB, Inc. (NASDAQ:MDB).

How are hedge funds trading MongoDB, Inc. (NASDAQ:MDB)?

At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in MDB a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in MongoDB, Inc. (NASDAQ:MDB) was held by Whale Rock Capital Management, which reported holding $142.4 million worth of stock at the end of September. It was followed by Tiger Global Management with a $104.7 million position. Other investors bullish on the company included SQN Investors, D E Shaw, and Altimeter Capital Management. In terms of the portfolio weights assigned to each position SQN Investors allocated the biggest weight to MongoDB, Inc. (NASDAQ:MDB), around 7.55% of its 13F portfolio. Whetstone Capital Advisors is also relatively very bullish on the stock, dishing out 6.36 percent of its 13F equity portfolio to MDB.

Since MongoDB, Inc. (NASDAQ:MDB) has faced falling interest from the smart money, logic holds that there were a few fund managers that elected to cut their full holdings last quarter. At the top of the heap, Christopher Lyle’s SCGE Management dumped the largest investment of all the hedgies watched by Insider Monkey, totaling an estimated $82.7 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund sold off about $34.1 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to MongoDB, Inc. (NASDAQ:MDB). These stocks are Xerox Holdings Corporation (NYSE:XRX), EQM Midstream Partners, LP (NYSE:EQM), Logitech International SA (NASDAQ:LOGI), and CAE, Inc. (NYSE:CAE). All of these stocks’ market caps match MDB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
XRX 32 1169230 4
EQM 11 35867 3
LOGI 14 213458 -2
CAE 11 145277 1
Average 17 390958 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $391 million. That figure was $527 million in MDB’s case. Xerox Holdings Corporation (NYSE:XRX) is the most popular stock in this table. On the other hand EQM Midstream Partners, LP (NYSE:EQM) is the least popular one with only 11 bullish hedge fund positions. MongoDB, Inc. (NASDAQ:MDB) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on MDB as the stock returned 57.2% in 2019 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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.

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