Was The Smart Money Right About Piling Into Bill.com Holdings (BILL)?

We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Bill.com Holdings, Inc. (NYSE:BILL) based on that data.

Bill.com Holdings, Inc. (NYSE:BILL) was in 52 hedge funds’ portfolios at the end of December. The all time high for this statistic is 52. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. BILL investors should pay attention to an increase in hedge fund interest lately. There were 44 hedge funds in our database with BILL positions at the end of the third quarter. Our calculations also showed that BILL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was 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). So you can still find a lot of gems by following hedge funds’ moves today.

Alex Sacerdote of Whale Rock Capital Management

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Do Hedge Funds Think BILL Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in BILL over the last 22 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Whale Rock Capital Management, managed by Alex Sacerdote, holds the largest position in Bill.com Holdings, Inc. (NYSE:BILL). Whale Rock Capital Management has a $479.5 million position in the stock, comprising 3.2% of its 13F portfolio. The second largest stake is Lone Pine Capital, with a $377.9 million position; 1.4% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions consist of Colin Moran’s Abdiel Capital Advisors, Eashwar Krishnan’s Tybourne Capital Management and Zach Schreiber’s Point State Capital. In terms of the portfolio weights assigned to each position 3G Capital allocated the biggest weight to Bill.com Holdings, Inc. (NYSE:BILL), around 16.05% of its 13F portfolio. Andar Capital is also relatively very bullish on the stock, setting aside 9.8 percent of its 13F equity portfolio to BILL.

As aggregate interest increased, key money managers have been driving this bullishness. Tybourne Capital Management, managed by Eashwar Krishnan, established the biggest position in Bill.com Holdings, Inc. (NYSE:BILL). Tybourne Capital Management had $175.8 million invested in the company at the end of the quarter. Aaron Cowen’s Suvretta Capital Management also made a $55.7 million investment in the stock during the quarter. The other funds with brand new BILL positions are Israel Englander’s Millennium Management, Amir Mokari’s Emerson Point Capital, and Wen Han Li’s Andar Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Bill.com Holdings, Inc. (NYSE:BILL). These stocks are Textron Inc. (NYSE:TXT), Mirati Therapeutics, Inc. (NASDAQ:MRTX), Bentley Systems, Incorporated (NASDAQ:BSY), Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR), CRISPR Therapeutics AG (NASDAQ:CRSP), XPO Logistics Inc (NYSE:XPO), and F5 Networks, Inc. (NASDAQ:FFIV). All of these stocks’ market caps are similar to BILL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TXT 23 589474 0
MRTX 56 3610322 18
BSY 19 82011 0
EBR 6 4239 2
CRSP 34 2010222 8
XPO 40 2981368 1
FFIV 34 1131637 -2
Average 30.3 1487039 3.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $1487 million. That figure was $1994 million in BILL’s case. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is the most popular stock in this table. On the other hand Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR) is the least popular one with only 6 bullish hedge fund positions. Bill.com Holdings, Inc. (NYSE:BILL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BILL is 86. 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 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on BILL, though not to the same extent, as the stock returned 13.3% since Q4 (through April 30th) and outperformed the market as well.

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