Did The Smart Money Get Alteryx, Inc. (AYX) Right?

Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Alteryx, Inc. (NYSE:AYX) at the end of the third quarter and determine whether the smart money was really smart about this stock.

Is Alteryx, Inc. (NYSE:AYX) a safe stock to buy now? Prominent investors were getting more optimistic. The number of bullish hedge fund bets went up by 4 lately. Alteryx, Inc. (NYSE:AYX) was in 37 hedge funds’ portfolios at the end of September. The all time high for this statistic is 48. Our calculations also showed that AYX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Colin Moran of Abdiel Capital Advisors

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 let’s go over the key hedge fund action regarding Alteryx, Inc. (NYSE:AYX).

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

At third quarter’s end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards AYX over the last 25 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Among these funds, Bares Capital Management held the most valuable stake in Alteryx, Inc. (NYSE:AYX), which was worth $342.5 million at the end of the third quarter. On the second spot was Alkeon Capital Management which amassed $145.9 million worth of shares. Abdiel Capital Advisors, Citadel Investment Group, and Washington Harbour Partners 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 Akaris Global Partners allocated the biggest weight to Alteryx, Inc. (NYSE:AYX), around 10.89% of its 13F portfolio. Akaris Global Partners is also relatively very bullish on the stock, dishing out 6.78 percent of its 13F equity portfolio to AYX.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Washington Harbour Partners, managed by Mina Faltas, initiated the biggest position in Alteryx, Inc. (NYSE:AYX). Washington Harbour Partners had $51.8 million invested in the company at the end of the quarter. Asad Rahman and Aman Kapadia’s Akaris Global Partners also made a $11 million investment in the stock during the quarter. The following funds were also among the new AYX investors: Israel Englander’s Millennium Management, Michael Cowley’s Sandbar Asset Management, and Phill Gross and Robert Atchinson’s Adage Capital Management.

Let’s now review hedge fund activity in other stocks similar to Alteryx, Inc. (NYSE:AYX). These stocks are Melco Resorts & Entertainment Limited (NASDAQ:MLCO), Herbalife Nutrition Ltd. (NYSE:HLF), National Beverage Corp. (NASDAQ:FIZZ), Pan American Silver Corp. (NASDAQ:PAAS), PowerSchool Holdings Inc. (NYSE:PWSC), Victorias Secret & Co. (NYSE:VSCO), and Wingstop Inc (NASDAQ:WING). This group of stocks’ market valuations match AYX’s market valuation.

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As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $1038 million. That figure was $857 million in AYX’s case. Herbalife Nutrition Ltd. (NYSE:HLF) is the most popular stock in this table. On the other hand PowerSchool Holdings Inc. (NYSE:PWSC) is the least popular one with only 11 bullish hedge fund positions. Alteryx, Inc. (NYSE:AYX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AYX is 80.3. 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 positive signal but 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 and beat the market again by 3.6 percentage points. Unfortunately, AYX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AYX were disappointed as the stock returned -21.9% since the end of September (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.

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

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