Were Hedge Funds Right About Piling Into Anaplan, Inc. (PLAN)?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Anaplan, Inc. (NYSE:PLAN).

Is Anaplan, Inc. (NYSE:PLAN) undervalued? The best stock pickers were getting more bullish. The number of bullish hedge fund bets improved by 8 lately. Anaplan, Inc. (NYSE:PLAN) was in 63 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 57. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PLAN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Harding

David Harding of Winton Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a gander at the recent hedge fund action regarding Anaplan, Inc. (NYSE:PLAN).

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

At Q4’s end, a total of 63 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in PLAN over the last 22 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is PLAN A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Coatue Management, managed by Philippe Laffont, holds the largest position in Anaplan, Inc. (NYSE:PLAN). Coatue Management has a $607.2 million position in the stock, comprising 2.3% of its 13F portfolio. Coming in second is Daniel S. Och of OZ Management, with a $281.2 million position; 1.2% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism include Michael Lowenstein’s Kensico Capital, Robert Pitts’s Steadfast Capital Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Cowbird Capital allocated the biggest weight to Anaplan, Inc. (NYSE:PLAN), around 8.34% of its 13F portfolio. Kensico Capital is also relatively very bullish on the stock, dishing out 5.46 percent of its 13F equity portfolio to PLAN.

As aggregate interest increased, key money managers were leading the bulls’ herd. Jericho Capital Asset Management, managed by Josh Resnick, assembled the most outsized position in Anaplan, Inc. (NYSE:PLAN). Jericho Capital Asset Management had $67.8 million invested in the company at the end of the quarter. Zach Schreiber’s Point State Capital also initiated a $40.2 million position during the quarter. The other funds with brand new PLAN positions are Panayotis Takis Sparaggis’s Alkeon Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Frank Fu’s CaaS Capital.

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 CBOE Global Markets Inc (NASDAQ:CBOE), Denali Therapeutics Inc. (NASDAQ:DNLI), Mohawk Industries, Inc. (NYSE:MHK), Quanta Services Inc (NYSE:PWR), Globe Life Inc. (NYSE:GL), Morningstar, Inc. (NASDAQ:MORN), and Fastly, Inc. (NYSE:FSLY). All of these stocks’ market caps resemble PLAN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CBOE 38 859817 5
DNLI 20 249226 -4
MHK 39 987416 -2
PWR 33 972610 1
GL 31 828725 0
MORN 19 892130 -2
FSLY 32 1551496 10
Average 30.3 905917 1.1

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 $906 million. That figure was $3062 million in PLAN’s case. Mohawk Industries, Inc. (NYSE:MHK) is the most popular stock in this table. On the other hand Morningstar, Inc. (NASDAQ:MORN) is the least popular one with only 19 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 90. 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. Unfortunately PLAN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PLAN were disappointed as the stock returned -17% since the end of the fourth quarter (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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