Is Anaplan (PLAN) Stock A Buy or Sell?

In this article we are going to use hedge fund sentiment as a tool and determine whether Anaplan, Inc. (NYSE:PLAN) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is Anaplan (PLAN) stock a buy or sell? Investors who are in the know were becoming more confident. The number of long hedge fund positions increased by 8 lately. Anaplan, Inc. (NYSE:PLAN) was in 63 hedge funds’ portfolios at the end of December. The all time high for this statistic is 57. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PLAN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Michael Lowenstein Kensico Capital

Michael Lowenstein of Kensico Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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. 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 homepage (or at the end of this article). Keeping this in mind let’s check out the fresh hedge fund action encompassing Anaplan, Inc. (NYSE:PLAN).

Do Hedge Funds Think PLAN Is A Good Stock To Buy Now?

At the end of December, a total of 63 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PLAN over the last 22 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

More specifically, Coatue Management was the largest shareholder of Anaplan, Inc. (NYSE:PLAN), with a stake worth $607.2 million reported as of the end of December. Trailing Coatue Management was OZ Management, which amassed a stake valued at $281.2 million. Kensico Capital, Steadfast Capital Management, and D E Shaw 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 Cowbird Capital allocated the biggest weight to Anaplan, Inc. (NYSE:PLAN), around 8.34% of its 13F portfolio. Kensico Capital is also relatively very bullish on the stock, dishing out 5.46 percent of its 13F equity portfolio to PLAN.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Jericho Capital Asset Management, managed by Josh Resnick, initiated the largest position in Anaplan, Inc. (NYSE:PLAN). Jericho Capital Asset Management had $67.8 million invested in the company at the end of the quarter. Zach Schreiber’s Point State Capital also made a $40.2 million investment in the stock during the quarter. The other funds with brand new PLAN positions are Panayotis Takis Sparaggis’s Alkeon Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Frank Fu’s CaaS Capital.

Let’s go over hedge fund activity in other stocks similar to Anaplan, Inc. (NYSE:PLAN). These stocks are CBOE Global Markets Inc (NASDAQ:CBOE), Denali Therapeutics Inc. (NASDAQ:DNLI), Mohawk Industries, Inc. (NYSE:MHK), Quanta Services Inc (NYSE:PWR), Globe Life Inc. (NYSE:GL), Morningstar, Inc. (NASDAQ:MORN), and Fastly, Inc. (NYSE:FSLY). This group of stocks’ market values resemble PLAN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CBOE 38 859817 5
DNLI 20 249226 -4
MHK 39 987416 -2
PWR 33 972610 1
GL 31 828725 0
MORN 19 892130 -2
FSLY 32 1551496 10
Average 30.3 905917 1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $906 million. That figure was $3062 million in PLAN’s case. Mohawk Industries, Inc. (NYSE:MHK) is the most popular stock in this table. On the other hand Morningstar, Inc. (NASDAQ:MORN) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Anaplan, Inc. (NYSE:PLAN) is more popular among hedge funds. Our overall hedge fund sentiment score for PLAN 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 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately PLAN wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on PLAN were disappointed as the stock returned -25.9% since the end of the fourth quarter (through 3/19) 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.