At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Yext, Inc. (NYSE:YEXT) makes for a good investment right now.
Is Yext, Inc. (NYSE:YEXT) an exceptional stock to buy now? The best stock pickers are selling. The number of bullish hedge fund bets fell by 8 in recent months. Our calculations also showed that YEXT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Atterbury of Whetstone Capital Advisors
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s go over the new hedge fund action regarding Yext, Inc. (NYSE:YEXT).
What does smart money think about Yext, Inc. (NYSE:YEXT)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from the previous quarter. The graph below displays the number of hedge funds with bullish position in YEXT over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Yext, Inc. (NYSE:YEXT) was held by D E Shaw, which reported holding $23.8 million worth of stock at the end of September. It was followed by Polar Capital with a $21.2 million position. Other investors bullish on the company included Renaissance Technologies, Whetstone Capital Advisors, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Whetstone Capital Advisors allocated the biggest weight to Yext, Inc. (NYSE:YEXT), around 3.04% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, designating 0.83 percent of its 13F equity portfolio to YEXT.
Due to the fact that Yext, Inc. (NYSE:YEXT) has faced a decline in interest from hedge fund managers, it’s safe to say that there exists a select few funds that elected to cut their full holdings last quarter. It’s worth mentioning that Seth Wunder’s Black-and-White Capital dropped the biggest position of the 750 funds tracked by Insider Monkey, valued at an estimated $10.7 million in stock, and Philip Hempleman’s Ardsley Partners was right behind this move, as the fund dropped about $4.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 8 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Yext, Inc. (NYSE:YEXT). These stocks are Altra Industrial Motion Corp. (NASDAQ:AIMC), SSR Mining Inc. (NASDAQ:SSRM), Sally Beauty Holdings, Inc. (NYSE:SBH), and Alexander’s, Inc. (NYSE:ALX). This group of stocks’ market values match YEXT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AIMC | 14 | 218302 | 0 |
| SSRM | 15 | 166357 | -1 |
| SBH | 22 | 167354 | 2 |
| ALX | 11 | 98202 | 7 |
| Average | 15.5 | 162554 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $163 million. That figure was $99 million in YEXT’s case. Sally Beauty Holdings, Inc. (NYSE:SBH) is the most popular stock in this table. On the other hand Alexander’s, Inc. (NYSE:ALX) is the least popular one with only 11 bullish hedge fund positions. Yext, Inc. (NYSE:YEXT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on YEXT, though not to the same extent, as the stock returned 8.6% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
