Were Hedge Funds Right About Flocking Into Akamai Technologies, Inc. (AKAM)?

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.

Akamai Technologies, Inc. (NASDAQ:AKAM) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that AKAM isn’t among the 30 most popular stocks among hedge funds.

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. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Glazer of Glazer Capital

We’re going to take a peek at the key hedge fund action regarding Akamai Technologies, Inc. (NASDAQ:AKAM).

How have hedgies been trading Akamai Technologies, Inc. (NASDAQ:AKAM)?

At Q4’s end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AKAM over the last 14 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).


More specifically, AQR Capital Management was the largest shareholder of Akamai Technologies, Inc. (NASDAQ:AKAM), with a stake worth $239.1 million reported as of the end of September. Trailing AQR Capital Management was Elliott Management, which amassed a stake valued at $145.6 million. Millennium Management, D E Shaw, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Oaktree Capital Management, managed by Howard Marks, created the biggest position in Akamai Technologies, Inc. (NASDAQ:AKAM). Oaktree Capital Management had $68.7 million invested in the company at the end of the quarter. Paul Glazer’s Glazer Capital also made a $48.7 million investment in the stock during the quarter. The following funds were also among the new AKAM investors: Brandon Haley’s Holocene Advisors, Anand Parekh’s Alyeska Investment Group, and John Osterweis’s Osterweis Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Akamai Technologies, Inc. (NASDAQ:AKAM) but similarly valued. We will take a look at Regency Centers Corp (NASDAQ:REG), Campbell Soup Company (NYSE:CPB), National Oilwell Varco, Inc. (NYSE:NOV), and PTC Inc (NASDAQ:PTC). All of these stocks’ market caps resemble AKAM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
REG 15 301496 -3
CPB 29 816874 0
NOV 22 583554 0
PTC 31 1395308 -15
Average 24.25 774308 -4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $774 million. That figure was $903 million in AKAM’s case. PTC Inc (NASDAQ:PTC) is the most popular stock in this table. On the other hand Regency Centers Corp (NASDAQ:REG) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Akamai Technologies, Inc. (NASDAQ:AKAM) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on AKAM, though not to the same extent, as the stock returned 18.6% and outperformed the market as well.

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