Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Apptio, Inc. (NASDAQ:APTI).
Apptio, Inc. (NASDAQ:APTI) has seen an increase in enthusiasm from smart money in recent months. APTI was in 25 hedge funds’ portfolios at the end of the third quarter of 2018. There were 20 hedge funds in our database with APTI positions at the end of the previous quarter. Our calculations also showed that apti isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s review the recent hedge fund action surrounding Apptio, Inc. (NASDAQ:APTI).
What have hedge funds been doing with Apptio, Inc. (NASDAQ:APTI)?
At Q3’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in APTI heading into this year. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, SQN Investors held the most valuable stake in Apptio, Inc. (NASDAQ:APTI), which was worth $73.2 million at the end of the third quarter. On the second spot was Alkeon Capital Management which amassed $35 million worth of shares. Moreover, Arrowstreet Capital, Whetstone Capital Advisors, and Balyasny Asset Management were also bullish on Apptio, Inc. (NASDAQ:APTI), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key money managers have jumped into Apptio, Inc. (NASDAQ:APTI) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized position in Apptio, Inc. (NASDAQ:APTI). Balyasny Asset Management had $24.1 million invested in the company at the end of the quarter. Ian Simm’s Impax Asset Management also initiated a $7.8 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, David Costen Haley’s HBK Investments, and Paul Holland and Matthew Miller’s Glaxis Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Apptio, Inc. (NASDAQ:APTI) but similarly valued. We will take a look at Cosan Limited (NYSE:CZZ), Fresh Del Monte Produce Inc (NYSE:FDP), Provident Financial Services, Inc. (NYSE:PFS), and Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC). This group of stocks’ market values resemble APTI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CZZ | 13 | 97937 | -4 |
| FDP | 14 | 38046 | 3 |
| PFS | 8 | 50269 | 1 |
| TRHC | 10 | 31591 | -1 |
| Average | 11.25 | 54461 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $322 million in APTI’s case. Fresh Del Monte Produce Inc (NYSE:FDP) is the most popular stock in this table. On the other hand Provident Financial Services, Inc. (NYSE:PFS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Apptio, Inc. (NASDAQ:APTI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
