In this article we will check out the progression of hedge fund sentiment towards Tenable Holdings, Inc. (NASDAQ:TENB) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is TENB stock a buy or sell? The best stock pickers were in a bullish mood. The number of long hedge fund positions increased by 9 in recent months. Tenable Holdings, Inc. (NASDAQ:TENB) was in 39 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TENB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 30 hedge funds in our database with TENB positions at the end of the third quarter.
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).
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. Now we’re going to take a glance at the key hedge fund action encompassing Tenable Holdings, Inc. (NASDAQ:TENB).
Do Hedge Funds Think TENB Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 30% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TENB over the last 22 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Select Equity Group was the largest shareholder of Tenable Holdings, Inc. (NASDAQ:TENB), with a stake worth $278.2 million reported as of the end of December. Trailing Select Equity Group was RGM Capital, which amassed a stake valued at $104.1 million. D E Shaw, Polar Capital, and Greenvale Capital 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 Toronado Partners allocated the biggest weight to Tenable Holdings, Inc. (NASDAQ:TENB), around 11.79% of its 13F portfolio. Washington Harbour Partners is also relatively very bullish on the stock, designating 5.17 percent of its 13F equity portfolio to TENB.
As industrywide interest jumped, specific money managers have been driving this bullishness. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, initiated the most valuable position in Tenable Holdings, Inc. (NASDAQ:TENB). Polar Capital had $82.5 million invested in the company at the end of the quarter. Glen Kacher’s Light Street Capital also initiated a $34.1 million position during the quarter. The other funds with new positions in the stock are Josh Resnick’s Jericho Capital Asset Management, Mina Faltas’s Washington Harbour Partners, and Amish Mehta’s SQN Investors.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Tenable Holdings, Inc. (NASDAQ:TENB) but similarly valued. These stocks are Envista Holdings Corporation (NYSE:NVST), Enel Chile S.A. (NYSE:ENIC), Coty Inc (NYSE:COTY), TriNet Group Inc (NYSE:TNET), Healthequity Inc (NASDAQ:HQY), CoreSite Realty Corp (NYSE:COR), and Apache Corporation (NYSE:APA). All of these stocks’ market caps resemble TENB’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $344 million. That figure was $902 million in TENB’s case. Apache Corporation (NYSE:APA) is the most popular stock in this table. On the other hand Enel Chile S.A. (NYSE:ENIC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Tenable Holdings, Inc. (NASDAQ:TENB) is more popular among hedge funds. Our overall hedge fund sentiment score for TENB 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 TENB wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on TENB were disappointed as the stock returned -27.8% 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.