Did The Smart Money Play ZoomInfo Technologies Inc. (ZI) Correctly?

Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value 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 ZoomInfo Technologies Inc. (NASDAQ:ZI) at the end of the third quarter and determine whether the smart money was really smart about this stock.

ZoomInfo Technologies Inc. (NASDAQ:ZI) has seen an increase in enthusiasm from smart money of late. ZoomInfo Technologies Inc. (NASDAQ:ZI) was in 57 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 35. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 35 hedge funds in our database with ZI positions at the end of the second quarter. Our calculations also showed that ZI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. Now let’s take a glance at the latest hedge fund action surrounding ZoomInfo Technologies Inc. (NASDAQ:ZI).

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

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

At Q3’s end, a total of 57 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 63% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in ZI a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, GQG Partners, managed by Rajiv Jain, holds the number one position in ZoomInfo Technologies Inc. (NASDAQ:ZI). GQG Partners has a $323.8 million position in the stock, comprising 0.9% of its 13F portfolio. The second largest stake is held by SRS Investment Management, led by Karthik Sarma, holding a $254.2 million position; 3.6% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism consist of Andreas Halvorsen’s Viking Global, Panayotis Takis Sparaggis’s Alkeon Capital Management and Josh Resnick’s Jericho Capital Asset Management. In terms of the portfolio weights assigned to each position Shannon River Fund Management allocated the biggest weight to ZoomInfo Technologies Inc. (NASDAQ:ZI), around 4.25% of its 13F portfolio. One Fin Capital Management is also relatively very bullish on the stock, designating 3.97 percent of its 13F equity portfolio to ZI.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. GQG Partners, managed by Rajiv Jain, assembled the biggest position in ZoomInfo Technologies Inc. (NASDAQ:ZI). GQG Partners had $323.8 million invested in the company at the end of the quarter. Karthik Sarma’s SRS Investment Management also initiated a $254.2 million position during the quarter. The other funds with new positions in the stock are Josh Resnick’s Jericho Capital Asset Management, D. E. Shaw’s D E Shaw, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s also examine hedge fund activity in other stocks similar to ZoomInfo Technologies Inc. (NASDAQ:ZI). We will take a look at Caesars Entertainment Inc. (NASDAQ:CZR), Credit Suisse Group AG (NYSE:CS), Rogers Communications Inc. (NYSE:RCI), Splunk Inc (NASDAQ:SPLK), Tractor Supply Company (NASDAQ:TSCO), Fox Corporation (NASDAQ:FOXA), and DISH Network Corp. (NASDAQ:DISH). All of these stocks’ market caps are closest to ZI’s market cap.

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As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1122 million. That figure was $1961 million in ZI’s case. Caesars Entertainment Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand Credit Suisse Group AG (NYSE:CS) is the least popular one with only 8 bullish hedge fund positions. ZoomInfo Technologies Inc. (NASDAQ:ZI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZI is 83.8. 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. 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, ZI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ZI were disappointed as the stock returned -13.6% 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.