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 Splunk Inc (NASDAQ:SPLK) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Splunk Inc (NASDAQ:SPLK) was in 49 hedge funds’ portfolios at the end of the second quarter of 2020. This is the new all time high for this statistics. SPLK investors should be aware of an increase in activity from the world’s largest hedge funds recently. There were 37 hedge funds in our database with SPLK holdings at the end of March. Our calculations also showed that SPLK 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of gauges stock market investors can use to grade publicly traded companies. A duo of the most innovative gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can trounce the S&P 500 by a superb margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. 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 junior gold mining stock.. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we’re going to check out the new hedge fund action surrounding Splunk Inc (NASDAQ:SPLK).
How are hedge funds trading Splunk Inc (NASDAQ:SPLK)?
At Q2’s end, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 32% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in SPLK a year ago. 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 Splunk Inc (NASDAQ:SPLK) was held by Holocene Advisors, which reported holding $156.9 million worth of stock at the end of September. It was followed by Iridian Asset Management with a $85.3 million position. Other investors bullish on the company included Citadel Investment Group, PEAK6 Capital Management, and Jericho Capital Asset Management. In terms of the portfolio weights assigned to each position North Peak Capital allocated the biggest weight to Splunk Inc (NASDAQ:SPLK), around 12.39% of its 13F portfolio. Whetstone Capital Advisors is also relatively very bullish on the stock, setting aside 6.85 percent of its 13F equity portfolio to SPLK.
As aggregate interest increased, key hedge funds have been driving this bullishness. Jericho Capital Asset Management, managed by Josh Resnick, assembled the most valuable position in Splunk Inc (NASDAQ:SPLK). Jericho Capital Asset Management had $68.4 million invested in the company at the end of the quarter. Mark Moore’s ThornTree Capital Partners also initiated a $27.4 million position during the quarter. The other funds with brand new SPLK positions are Larry Chen and Terry Zhang’s Tairen Capital, John Hurley’s Cavalry Asset Management, and Mark Kingdon’s Kingdon Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Splunk Inc (NASDAQ:SPLK) but similarly valued. We will take a look at Orange SA (NYSE:ORAN), Phillips 66 (NYSE:PSX), Mizuho Financial Group Inc. (NYSE:MFG), O’Reilly Automotive Inc (NASDAQ:ORLY), Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), Southern Copper Corporation (NYSE:SCCO), and Twilio Inc. (NYSE:TWLO). All of these stocks’ market caps are closest to SPLK’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $1095 million. That figure was $874 million in SPLK’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 3 bullish hedge fund positions. Splunk Inc (NASDAQ:SPLK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SPLK is 72.8. 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 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately SPLK wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SPLK were disappointed as the stock returned 10.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.