SailPoint Technologies Holdings, Inc. (SAIL): Hedge Funds In Wait-and-See Mode

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought SailPoint Technologies Holdings, Inc. (NYSE:SAIL) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

SailPoint Technologies Holdings, Inc. (NYSE:SAIL) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 21 hedge funds’ portfolios at the end of June. Our calculations also showed that SAIL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare SAIL to other stocks including Fiverr International Ltd. (NYSE:FVRR), Sunrun Inc (NASDAQ:RUN), and DCP Midstream LP (NYSE:DCP) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

According to most stock holders, hedge funds are perceived as underperforming, old financial vehicles of years past. While there are over 8000 funds trading today, Our researchers look at the elite of this club, around 850 funds. Most estimates calculate that this group of people handle the lion’s share of the smart money’s total capital, and by keeping an eye on their best equity investments, Insider Monkey has formulated a number of investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Steven Cohen of Point72 Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 to get excerpts of these letters in your inbox. Keeping this in mind let’s take a look at the recent hedge fund action regarding SailPoint Technologies Holdings, Inc. (NYSE:SAIL).

What have hedge funds been doing with SailPoint Technologies Holdings, Inc. (NYSE:SAIL)?

At the end of June, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SAIL over the last 20 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Is SAIL A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Gil Simon’s SoMa Equity Partners has the biggest position in SailPoint Technologies Holdings, Inc. (NYSE:SAIL), worth close to $140.3 million, corresponding to 5.5% of its total 13F portfolio. The second most bullish fund manager is Point72 Asset Management, managed by Steve Cohen, which holds a $85.3 million position; 0.6% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish consist of Robert G. Moses’s RGM Capital, Mick Hellman’s HMI Capital and Spencer M. Waxman’s Shannon River Fund Management. In terms of the portfolio weights assigned to each position Shannon River Fund Management allocated the biggest weight to SailPoint Technologies Holdings, Inc. (NYSE:SAIL), around 6.04% of its 13F portfolio. SoMa Equity Partners is also relatively very bullish on the stock, earmarking 5.47 percent of its 13F equity portfolio to SAIL.

Since SailPoint Technologies Holdings, Inc. (NYSE:SAIL) has witnessed a decline in interest from the smart money, it’s easy to see that there was a specific group of fund managers that elected to cut their entire stakes last quarter. At the top of the heap, Greg Eisner’s Engineers Gate Manager said goodbye to the largest position of the “upper crust” of funds followed by Insider Monkey, valued at about $1.3 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dumped its stock, about $1.1 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to SailPoint Technologies Holdings, Inc. (NYSE:SAIL). We will take a look at Fiverr International Ltd. (NYSE:FVRR), Sunrun Inc (NASDAQ:RUN), DCP Midstream LP (NYSE:DCP), SINA Corp (NASDAQ:SINA), Umpqua Holdings Corp (NASDAQ:UMPQ), iRobot Corporation (NASDAQ:IRBT), and LivaNova PLC (NASDAQ:LIVN). This group of stocks’ market valuations resemble SAIL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FVRR 21 184813 8
RUN 21 682771 -3
DCP 2 3369 -2
SINA 16 103843 3
UMPQ 24 151735 1
IRBT 22 126930 3
LIVN 29 368844 5
Average 19.3 231758 2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.3 hedge funds with bullish positions and the average amount invested in these stocks was $232 million. That figure was $491 million in SAIL’s case. LivaNova PLC (NASDAQ:LIVN) is the most popular stock in this table. On the other hand DCP Midstream LP (NYSE:DCP) is the least popular one with only 2 bullish hedge fund positions. SailPoint Technologies Holdings, Inc. (NYSE:SAIL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SAIL is 63.5. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of third quarter and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on SAIL as the stock returned 49.5% during Q3 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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