Is Asana Inc. (ASAN) A Good Stock To Buy?

In this article you are going to find out whether hedge funds think Asana Inc. (NYSE:ASAN) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is ASAN a good stock to buy now? Asana Inc. (NYSE:ASAN) investors should be aware of an increase in hedge fund interest recently. Asana Inc. (NYSE:ASAN) was in 22 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 18 hedge funds in our database with ASAN positions at the end of the fourth quarter. Our calculations also showed that ASAN isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Blood

David Blood of Generation Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla 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. Keeping this in mind we’re going to check out the fresh hedge fund action surrounding Asana Inc. (NYSE:ASAN).

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

Heading into the second quarter of 2021, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the fourth quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in ASAN a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Among these funds, Generation Investment Management held the most valuable stake in Asana Inc. (NYSE:ASAN), which was worth $143 million at the end of the fourth quarter. On the second spot was Tiger Global Management LLC which amassed $82.3 million worth of shares. 12 West Capital Management, Citadel Investment Group, and Millennium 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 12 West Capital Management allocated the biggest weight to Asana Inc. (NYSE:ASAN), around 3.12% of its 13F portfolio. Axel Capital Management is also relatively very bullish on the stock, designating 0.89 percent of its 13F equity portfolio to ASAN.

Now, some big names were leading the bulls’ herd. 12 West Capital Management, managed by Joel Ramin, created the largest position in Asana Inc. (NYSE:ASAN). 12 West Capital Management had $65.4 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also initiated a $8.6 million position during the quarter. The following funds were also among the new ASAN investors: Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Alok Agrawal’s Bloom Tree Partners, and Brandon Haley’s Holocene Advisors.

Let’s now review hedge fund activity in other stocks similar to Asana Inc. (NYSE:ASAN). We will take a look at ShockWave Medical, Inc. (NASDAQ:SWAV), Allison Transmission Holdings Inc (NYSE:ALSN), The Wendy’s Company (NASDAQ:WEN), B2Gold Corp (NYSE:BTG), Zhihu Inc. (NYSE:ZH), Element Solutions Inc. (NYSE:ESI), and DCP Midstream LP (NYSE:DCP). This group of stocks’ market values are closest to ASAN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SWAV 17 219798 -5
ALSN 30 498494 5
WEN 26 1018985 -5
BTG 18 313091 -4
ZH 23 94311 23
ESI 33 624419 4
DCP 4 20645 1
Average 21.6 398535 2.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $399 million. That figure was $375 million in ASAN’s case. Element Solutions Inc. (NYSE:ESI) is the most popular stock in this table. On the other hand DCP Midstream LP (NYSE:DCP) is the least popular one with only 4 bullish hedge fund positions. Asana Inc. (NYSE:ASAN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ASAN is 70. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on ASAN as the stock returned 127.4% since the end of Q1 (through 7/16) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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