How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Anaplan, Inc. (NYSE:PLAN) and determine whether hedge funds had an edge regarding this stock.
Is Anaplan, Inc. (NYSE:PLAN) a worthy investment right now? Money managers were getting more bullish. The number of long hedge fund bets went up by 9 in recent months. Anaplan, Inc. (NYSE:PLAN) was in 61 hedge funds’ portfolios at the end of September. The all time high for this statistic is 63. Our calculations also showed that PLAN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Ricky Sandler of Eminence Capital
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 take a gander at the recent hedge fund action encompassing Anaplan, Inc. (NYSE:PLAN).
Do Hedge Funds Think PLAN Is A Good Stock To Buy Now?
At the end of September, a total of 61 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the second quarter of 2021. On the other hand, there were a total of 55 hedge funds with a bullish position in PLAN a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Cadian Capital held the most valuable stake in Anaplan, Inc. (NYSE:PLAN), which was worth $323.8 million at the end of the third quarter. On the second spot was Sculptor Capital which amassed $245.6 million worth of shares. Alkeon Capital Management, Steadfast Capital Management, and Eminence Capital 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 Cadian Capital allocated the biggest weight to Anaplan, Inc. (NYSE:PLAN), around 12.22% of its 13F portfolio. Hunt Lane Capital is also relatively very bullish on the stock, dishing out 5.51 percent of its 13F equity portfolio to PLAN.
Consequently, key hedge funds have jumped into Anaplan, Inc. (NYSE:PLAN) headfirst. Eminence Capital, managed by Ricky Sandler, assembled the biggest position in Anaplan, Inc. (NYSE:PLAN). Eminence Capital had $164.3 million invested in the company at the end of the quarter. Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management also initiated a $164.1 million position during the quarter. The other funds with new positions in the stock are Gavin Baker’s Atreides Management, Ryan Frick and Oliver Evans’s Dorsal Capital Management, and Josh Donfeld and David Rogers’s Castle Hook Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Anaplan, Inc. (NYSE:PLAN) but similarly valued. We will take a look at SiteOne Landscape Supply, Inc. (NYSE:SITE), Sibanye Stillwater Limited (NYSE:SBSW), Credicorp Ltd. (NYSE:BAP), Owens Corning (NYSE:OC), Lattice Semiconductor Corporation (NASDAQ:LSCC), Thoughtworks Holding Inc. (NASDAQ:TWKS), and AutoNation, Inc. (NYSE:AN). This group of stocks’ market values are similar to PLAN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SITE | 15 | 120291 | -10 |
| SBSW | 9 | 141727 | -6 |
| BAP | 15 | 188052 | -4 |
| OC | 24 | 453991 | -10 |
| LSCC | 19 | 366512 | -5 |
| TWKS | 20 | 235543 | 20 |
| AN | 29 | 680901 | 5 |
| Average | 18.7 | 312431 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $312 million. That figure was $2812 million in PLAN’s case. AutoNation, Inc. (NYSE:AN) is the most popular stock in this table. On the other hand Sibanye Stillwater Limited (NYSE:SBSW) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Anaplan, Inc. (NYSE:PLAN) is more popular among hedge funds. Our overall hedge fund sentiment score for PLAN is 89. 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 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 still beat the market by 3.6 percentage points. Unfortunately, PLAN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PLAN were disappointed as the stock returned -20.7% since the end of the third quarter (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.
Follow Anaplan Inc. (NYSE:PLAN)
Follow Anaplan Inc. (NYSE:PLAN)
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Disclosure: None. This article was originally published at Insider Monkey.
