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Were Hedge Funds Right About Piling Into Alteryx, Inc. (AYX)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Alteryx, Inc. (NYSE:AYX) based on that data and determine whether they were really smart about the stock.

Is Alteryx, Inc. (NYSE:AYX) a good investment now? Investors who are in the know were getting less optimistic. The number of long hedge fund bets dropped by 1 lately. Our calculations also showed that AYX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). AYX was in 43 hedge funds’ portfolios at the end of the first quarter of 2020. There were 44 hedge funds in our database with AYX holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most shareholders, hedge funds are perceived as unimportant, old investment vehicles of the past. While there are greater than 8000 funds trading at present, Our experts hone in on the crème de la crème of this group, about 850 funds. Most estimates calculate that this group of people administer bulk of the hedge fund industry’s total asset base, and by watching their inimitable picks, Insider Monkey has brought to light various investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Keith Meister of Corvex Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, this trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. 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 gold prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the fresh hedge fund action surrounding Alteryx, Inc. (NYSE:AYX).

How have hedgies been trading Alteryx, Inc. (NYSE:AYX)?

Heading into the second quarter of 2020, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from the previous quarter. On the other hand, there were a total of 31 hedge funds with a bullish position in AYX a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

The largest stake in Alteryx, Inc. (NYSE:AYX) was held by Abdiel Capital Advisors, which reported holding $351 million worth of stock at the end of September. It was followed by Alkeon Capital Management with a $200 million position. Other investors bullish on the company included Whale Rock Capital Management, Polar Capital, and Corvex Capital. In terms of the portfolio weights assigned to each position Abdiel Capital Advisors allocated the biggest weight to Alteryx, Inc. (NYSE:AYX), around 16.41% of its 13F portfolio. Cowbird Capital is also relatively very bullish on the stock, designating 12.57 percent of its 13F equity portfolio to AYX.

Judging by the fact that Alteryx, Inc. (NYSE:AYX) has faced falling interest from the smart money, it’s easy to see that there is a sect of hedge funds that decided to sell off their full holdings last quarter. At the top of the heap, Stanley Druckenmiller’s Duquesne Capital dropped the largest investment of the 750 funds monitored by Insider Monkey, worth an estimated $11 million in stock, and Louis Bacon’s Moore Global Investments was right behind this move, as the fund dumped about $10.5 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Alteryx, Inc. (NYSE:AYX) but similarly valued. We will take a look at Universal Display Corporation (NASDAQ:OLED), PPD, Inc. (NASDAQ:PPD), OGE Energy Corp. (NYSE:OGE), and A. O. Smith Corporation (NYSE:AOS). All of these stocks’ market caps are closest to AYX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OLED 24 222953 -7
PPD 27 512293 27
OGE 21 215864 4
AOS 25 363596 -1
Average 24.25 328677 5.75

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 $329 million. That figure was $1020 million in AYX’s case. PPD, Inc. (NASDAQ:PPD) is the most popular stock in this table. On the other hand OGE Energy Corp. (NYSE:OGE) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Alteryx, Inc. (NYSE:AYX) is more popular among hedge funds. 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 returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on AYX as the stock returned 72.6% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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