Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of C3.ai, Inc. (NYSE:AI).
C3.ai, Inc. (NYSE:AI) has seen an increase in hedge fund interest lately. C3.ai, Inc. (NYSE:AI) was in 29 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 37. There were 27 hedge funds in our database with AI holdings at the end of March. Our calculations also showed that AI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Chase Coleman of Tiger Global
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 are checking out stock pitches like this emerging lithium stock. 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. 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 view the recent hedge fund action surrounding C3.ai, Inc. (NYSE:AI).
Do Hedge Funds Think AI Is A Good Stock To Buy Now?
At the end of June, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in AI a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Tiger Global Management LLC, managed by Chase Coleman, holds the number one position in C3.ai, Inc. (NYSE:AI). Tiger Global Management LLC has a $62.5 million position in the stock, comprising 0.1% of its 13F portfolio. On Tiger Global Management LLC’s heels is Coatue Management, managed by Philippe Laffont, which holds a $48.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of Paul Tudor Jones’s Tudor Investment Corp, and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Kayak Investment Partners allocated the biggest weight to C3.ai, Inc. (NYSE:AI), around 1.31% of its 13F portfolio. Element Capital Management is also relatively very bullish on the stock, earmarking 0.99 percent of its 13F equity portfolio to AI.
As one would reasonably expect, key hedge funds were breaking ground themselves. D E Shaw, managed by D. E. Shaw, initiated the largest position in C3.ai, Inc. (NYSE:AI). D E Shaw had $14.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $8.7 million investment in the stock during the quarter. The other funds with brand new AI positions are Frank Fu’s CaaS Capital, Jeffrey Talpins’s Element Capital Management, and Renaissance Technologies.
Let’s go over hedge fund activity in other stocks similar to C3.ai, Inc. (NYSE:AI). We will take a look at Halozyme Therapeutics, Inc. (NASDAQ:HALO), Stitch Fix, Inc. (NASDAQ:SFIX), BlackLine, Inc. (NASDAQ:BL), American Campus Communities, Inc. (NYSE:ACC), Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), and Affiliated Managers Group, Inc. (NYSE:AMG). This group of stocks’ market valuations are closest to AI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HALO | 20 | 194639 | -3 |
| SFIX | 35 | 702790 | 7 |
| BL | 20 | 266005 | -4 |
| ACC | 21 | 222547 | -5 |
| RARE | 32 | 770180 | 7 |
| WSC | 52 | 1399877 | 5 |
| AMG | 30 | 784733 | 4 |
| Average | 30 | 620110 | 1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $620 million. That figure was $259 million in AI’s case. WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) is the most popular stock in this table. On the other hand Halozyme Therapeutics, Inc. (NASDAQ:HALO) is the least popular one with only 20 bullish hedge fund positions. C3.ai, Inc. (NYSE:AI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AI is 44.6. 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 through November 5th and surpassed the market again by 3.1 percentage points. Unfortunately AI wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AI investors were disappointed as the stock returned -22.7% since the end of June (through 11/5) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
