Did The Smart Money Play Akamai Technologies, Inc. (AKAM) Correctly?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Akamai Technologies, Inc. (NASDAQ:AKAM) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Akamai Technologies, Inc. (NASDAQ:AKAM) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 30 hedge funds’ portfolios at the end of September. Our calculations also showed that AKAM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as PagSeguro Digital Ltd. (NYSE:PAGS), Continental Resources, Inc. (NYSE:CLR), and Wheaton Precious Metals Corp. (NYSE:WPM) to gather more data points.

David Siegel of Two Sigma 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. Keeping this in mind we’re going to take a gander at the recent hedge fund action surrounding Akamai Technologies, Inc. (NASDAQ:AKAM).

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

At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AKAM over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group has the most valuable position in Akamai Technologies, Inc. (NASDAQ:AKAM), worth close to $84.8 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $50.9 million call position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism include Anand Parekh’s Alyeska Investment Group, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Skylands Capital allocated the biggest weight to Akamai Technologies, Inc. (NASDAQ:AKAM), around 0.58% of its 13F portfolio. Alyeska Investment Group is also relatively very bullish on the stock, designating 0.52 percent of its 13F equity portfolio to AKAM.

Seeing as Akamai Technologies, Inc. (NASDAQ:AKAM) has faced falling interest from the smart money, logic holds that there is a sect of fund managers that elected to cut their full holdings in the third quarter. It’s worth mentioning that Israel Englander’s Millennium Management dropped the largest investment of the 750 funds watched by Insider Monkey, comprising close to $4.1 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dropped about $3.1 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Akamai Technologies, Inc. (NASDAQ:AKAM). We will take a look at PagSeguro Digital Ltd. (NYSE:PAGS), Continental Resources, Inc. (NYSE:CLR), Wheaton Precious Metals Corp. (NYSE:WPM), Boston Properties, Inc. (NYSE:BXP), ASE Technology Holding Co., Ltd. (NYSE:ASX), Carlyle Group Inc (NASDAQ:CG), and Ceridian HCM Holding Inc. (NYSE:CDAY). This group of stocks’ market caps resemble AKAM’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $1129 million. That figure was $328 million in AKAM’s case. PagSeguro Digital Ltd. (NYSE:PAGS) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 10 bullish hedge fund positions. Akamai Technologies, Inc. (NASDAQ:AKAM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AKAM is 59.8. 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 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 still beat the market by 3.6 percentage points. Hedge funds were also right about betting on AKAM as the stock returned 9.5% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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