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Is Tableau Software Inc (DATA) Worthy of Your Portfolio?

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Tableau Software Inc (NYSE:DATA), and what that likely means for the prospects of the company and its stock.

Is Tableau Software Inc (NYSE:DATA) undervalued? It looks like hedge funds are taking a bearish view, judging by the fact that the number of bullish hedge fund positions fell by five in recent months. At the end of this article we will also compare DATA to other stocks, including Synovus Financial Corp. (NYSE:SNV), The Hanover Insurance Group, Inc. (NYSE:THG), and SINA Corp (NASDAQ:SINA) to get a better sense of its popularity.

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With all of this in mind, let’s check out the new action encompassing Tableau Software Inc (NYSE:DATA).

What does the smart money think about Tableau Software Inc (NYSE:DATA)?

At the end of the third quarter, 29 funds tracked by Insider Monkey were bullish on Tableau Software, down by 15% from the end of the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Matrix Capital Management, led by David Goel and Paul Ferri, holds the number one position in Tableau Software Inc (NYSE:DATA). Matrix Capital Management has a $302.6 million position in the stock, comprising 12.7% of its 13F portfolio. Sitting at the No. 2 spot is Bain Capital’s Brookside Capital, with a $108.3 million position; 7% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish comprise Eric Bannasch’s Cadian Capital, Brad Gerstner’s Altimeter Capital Management, and Mick Hellman’s HMI Capital.

Seeing as Tableau Software Inc (NYSE:DATA) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of funds that elected to cut their entire stakes in the third quarter. It’s worth mentioning that Karthik Sarma’s SRS Investment Management cut the largest investment of all the hedgies watched by Insider Monkey, valued at about $48.9 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $30.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 5 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Tableau Software Inc (NYSE:DATA) but similarly valued. We will take a look at Synovus Financial Corp. (NYSE:SNV), The Hanover Insurance Group, Inc. (NYSE:THG), SINA Corp (NASDAQ:SINA), and Medical Properties Trust, Inc. (NYSE:MPW). This group of stocks’ market values are similar to DATA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNV 21 454718 -1
THG 16 172459 -3
SINA 33 796653 12
MPW 23 211104 11

As you can see these stocks had an average of 23 funds with bullish positions and the average amount invested in these stocks was $409 million. That figure was $899 million in DATA’s case. SINA Corp (NASDAQ:SINA) is the most popular stock in this table. On the other hand The Hanover Insurance Group, Inc. (NYSE:THG) is the least popular one with only 16 bullish hedge fund positions. Tableau Software Inc (NYSE:DATA) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SINA Corp (NASDAQ:SINA) might be a better candidate to consider a long position.

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