Is AYX Stock A Buy or Sell?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Alteryx, Inc. (NYSE:AYX) changed recently.

Is AYX stock a buy or sell? Prominent investors were becoming more confident. The number of bullish hedge fund positions moved up by 1 recently. Alteryx, Inc. (NYSE:AYX) was in 42 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 48. Our calculations also showed that AYX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 124 percentage points since March 2017 (see the details here).

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. 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. Keeping this in mind let’s analyze the recent hedge fund action encompassing Alteryx, Inc. (NYSE:AYX).

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

At fourth quarter’s end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AYX over the last 22 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Bares Capital Management, managed by Brian Bares, holds the biggest position in Alteryx, Inc. (NYSE:AYX). Bares Capital Management has a $409.3 million position in the stock, comprising 7.6% of its 13F portfolio. Coming in second is Coatue Management, managed by Philippe Laffont, which holds a $377.8 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish encompass Panayotis Takis Sparaggis’s Alkeon Capital Management, Colin Moran’s Abdiel Capital Advisors and Michael Lowenstein’s Kensico Capital. In terms of the portfolio weights assigned to each position Bares Capital Management allocated the biggest weight to Alteryx, Inc. (NYSE:AYX), around 7.57% of its 13F portfolio. Abdiel Capital Advisors is also relatively very bullish on the stock, earmarking 4.36 percent of its 13F equity portfolio to AYX.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Coatue Management, managed by Philippe Laffont, established the most outsized position in Alteryx, Inc. (NYSE:AYX). Coatue Management had $377.8 million invested in the company at the end of the quarter. Frank Fu’s CaaS Capital also made a $35.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Parvinder Thiara’s Athanor Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Alteryx, Inc. (NYSE:AYX) but similarly valued. These stocks are Adaptive Biotechnologies Corporation (NASDAQ:ADPT), Deckers Outdoor Corp (NASDAQ:DECK), PRA Health Sciences Inc (NASDAQ:PRAH), Autoliv Inc. (NYSE:ALV), Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), MINISO Group Holding Limited (NYSE:MNSO), and Aegon N.V. (NYSE:AEG). This group of stocks’ market caps resemble AYX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ADPT 30 3096715 4
DECK 45 1300910 -9
PRAH 23 214759 -1
ALV 26 808610 7
NCLH 40 334617 14
MNSO 18 210625 18
AEG 4 16895 1
Average 26.6 854733 4.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $855 million. That figure was $1458 million in AYX’s case. Deckers Outdoor Corp (NASDAQ:DECK) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 4 bullish hedge fund positions. Alteryx, Inc. (NYSE:AYX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AYX is 78.6. 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 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately AYX wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on AYX were disappointed as the stock returned -31.7% since the end of December (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 many of these stocks already outperformed the market since 2019.

Follow Alteryx Inc. (NYSE:AYX)

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