Were Expert Investors Right About SentinelOne, Inc. (S)?

Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards SentinelOne, Inc. (NYSE:S) at the end of the third quarter and determine whether the smart money was really smart about this stock.

SentinelOne, Inc. (NYSE:S) was in 35 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 67. S has seen a decrease in hedge fund interest in recent months. There were 67 hedge funds in our database with S holdings at the end of June. Our calculations also showed that S isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to go over the recent hedge fund action surrounding SentinelOne, Inc. (NYSE:S).

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

At third quarter’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -48% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in S a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Among these funds, Third Point held the most valuable stake in SentinelOne, Inc. (NYSE:S), which was worth $1396 million at the end of the third quarter. On the second spot was SCGE Management which amassed $274.6 million worth of shares. Alta Park Capital, Tiger Global Management LLC, and Citadel Investment Group 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 Alta Park Capital allocated the biggest weight to SentinelOne, Inc. (NYSE:S), around 9.76% of its 13F portfolio. Third Point is also relatively very bullish on the stock, earmarking 7.62 percent of its 13F equity portfolio to S.

Judging by the fact that SentinelOne, Inc. (NYSE:S) has witnessed a decline in interest from the smart money, it’s safe to say that there were a few money managers who sold off their entire stakes last quarter. It’s worth mentioning that Aaron Cowen’s Suvretta Capital Management dropped the largest stake of the 750 funds watched by Insider Monkey, comprising an estimated $29.8 million in stock. Kevin Michael Ulrich and Anthony Davis’s fund, Anchorage Advisors, also dumped its stock, about $29.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 32 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to SentinelOne, Inc. (NYSE:S). These stocks are Cognex Corporation (NASDAQ:CGNX), BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), PTC Inc (NASDAQ:PTC), Cardinal Health, Inc. (NYSE:CAH), Clarivate Plc (NYSE:CLVT), Alliant Energy Corporation (NASDAQ:LNT), and Zendesk Inc (NYSE:ZEN). This group of stocks’ market values match S’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.1 hedge funds with bullish positions and the average amount invested in these stocks was $1530 million. That figure was $2234 million in S’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Alliant Energy Corporation (NASDAQ:LNT) is the least popular one with only 17 bullish hedge fund positions. SentinelOne, Inc. (NYSE:S) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for S is 13.7. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately, S wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); S investors were disappointed as the stock returned -16.5% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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