In this article we will take a look at whether hedge funds think Atlassian Corporation Plc (NASDAQ:TEAM) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is TEAM stock a buy or sell? Atlassian Corporation Plc (NASDAQ:TEAM) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. Atlassian Corporation Plc (NASDAQ:TEAM) was in 69 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 62. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TEAM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Gabriel Plotkin of Melvin Capital Management
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Do Hedge Funds Think TEAM Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 69 of the hedge funds tracked by Insider Monkey were long this stock, a change of 44% from the previous quarter. On the other hand, there were a total of 62 hedge funds with a bullish position in TEAM a year ago. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Atlassian Corporation Plc (NASDAQ:TEAM) was held by Renaissance Technologies, which reported holding $1016.2 million worth of stock at the end of December. It was followed by Lone Pine Capital with a $800.6 million position. Other investors bullish on the company included Tiger Global Management LLC, Melvin Capital Management, and Foxhaven Asset Management. In terms of the portfolio weights assigned to each position Strategy Capital allocated the biggest weight to Atlassian Corporation Plc (NASDAQ:TEAM), around 15.48% of its 13F portfolio. Stony Point Capital is also relatively very bullish on the stock, earmarking 7.17 percent of its 13F equity portfolio to TEAM.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Alkeon Capital Management, managed by Panayotis Takis Sparaggis, created the largest position in Atlassian Corporation Plc (NASDAQ:TEAM). Alkeon Capital Management had $185.2 million invested in the company at the end of the quarter. Daniel Sundheim’s D1 Capital Partners also initiated a $124 million position during the quarter. The following funds were also among the new TEAM investors: Brandon Haley’s Holocene Advisors, Josh Resnick’s Jericho Capital Asset Management, and Bo Shan’s Gobi Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Atlassian Corporation Plc (NASDAQ:TEAM) but similarly valued. These stocks are The Progressive Corporation (NYSE:PGR), Ferrari N.V. (NYSE:RACE), ABB Ltd (NYSE:ABB), Workday Inc (NASDAQ:WDAY), Takeda Pharmaceutical Company Limited (NYSE:TAK), Edwards Lifesciences Corporation (NYSE:EW), and PetroChina Company Limited (NYSE:PTR). This group of stocks’ market values match TEAM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PGR | 48 | 1744884 | 1 |
| RACE | 29 | 1527088 | -2 |
| ABB | 8 | 467566 | -5 |
| WDAY | 80 | 4443166 | 6 |
| TAK | 18 | 835529 | -1 |
| EW | 38 | 1243466 | -8 |
| PTR | 5 | 61529 | -1 |
| Average | 32.3 | 1474747 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $1475 million. That figure was $4933 million in TEAM’s case. Workday Inc (NASDAQ:WDAY) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 5 bullish hedge fund positions. Atlassian Corporation Plc (NASDAQ:TEAM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TEAM is 82.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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% in 2021 through March 12th and beat the market again by 1.6 percentage points. Unfortunately TEAM wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on TEAM were disappointed as the stock returned -2% since the end of December (through 3/12) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
