While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, 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 C3.ai, Inc. (NYSE:AI).
Is C3.ai (AI) stock a buy? The best stock pickers were betting on the stock. The number of bullish hedge fund bets increased by 37 recently. C3.ai, Inc. (NYSE:AI) was in 37 hedge funds’ portfolios at the end of the fourth quarter of 2020. Our calculations also showed that AI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to review the latest hedge fund action regarding C3.ai, Inc. (NYSE:AI).
Do Hedge Funds Think AI Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 37 from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in AI 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.
More specifically, Tiger Global Management LLC was the largest shareholder of C3.ai, Inc. (NYSE:AI), with a stake worth $138.8 million reported as of the end of December. Trailing Tiger Global Management LLC was Tudor Investment Corp, which amassed a stake valued at $104.1 million. Cadian Capital, Matrix Capital Management, and Whale Rock Capital 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 Tudor Investment Corp allocated the biggest weight to C3.ai, Inc. (NYSE:AI), around 2.94% of its 13F portfolio. Ratan Capital Group is also relatively very bullish on the stock, setting aside 1.94 percent of its 13F equity portfolio to AI.
As one would reasonably expect, key hedge funds were breaking ground themselves. Tiger Global Management LLC, managed by Chase Coleman, created the largest position in C3.ai, Inc. (NYSE:AI). Tiger Global Management LLC had $138.8 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $104.1 million investment in the stock during the quarter. The other funds with brand new AI positions are Eric Bannasch’s Cadian Capital, David Goel and Paul Ferri’s Matrix Capital Management, and Alex Sacerdote’s Whale Rock Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as C3.ai, Inc. (NYSE:AI) but similarly valued. These stocks are WPP Plc (NASDAQ:WPP), The J.M. Smucker Company (NYSE:SJM), James Hardie Industries plc (NYSE:JHX), DaVita Inc (NYSE:DVA), Raymond James Financial, Inc. (NYSE:RJF), Packaging Corporation Of America (NYSE:PKG), and Credicorp Ltd. (NYSE:BAP). This group of stocks’ market values are closest to AI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WPP | 6 | 37552 | -1 |
| SJM | 34 | 580428 | 3 |
| JHX | 4 | 11803 | 0 |
| DVA | 32 | 4814258 | -2 |
| RJF | 34 | 580848 | 6 |
| PKG | 16 | 128753 | -7 |
| BAP | 15 | 203933 | -4 |
| Average | 20.1 | 908225 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $908 million. That figure was $484 million in AI’s case. The J.M. Smucker Company (NYSE:SJM) is the most popular stock in this table. On the other hand James Hardie Industries plc (NYSE:JHX) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks C3.ai, Inc. (NYSE:AI) is more popular among hedge funds. Our overall hedge fund sentiment score for AI is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Unfortunately AI wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on AI were disappointed as the stock returned -50.3% since the end of the fourth quarter (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
