World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Five9 Inc (NASDAQ:FIVN) was in 7 hedge funds’ portfolios at the end of the third quarter of 2015. Five9 Inc (NASDAQ:FIVN) shareholders have witnessed a decrease in hedge fund sentiment of late. There were 13 hedge funds in our database with Five9 Inc (NASDAQ:FIVN) positions at the end of the previous quarter. The hedge fund activity was quite similar to the stock performance of the company, as it lost 29.25% stock value during the quarter. We will find out more about the hedge funds that had stakes in Five9 Inc (NASDAQ:FIVN) at the end of the last quarter.
At the end of this article, we will also compare Five9 Inc (NASDAQ:FIVN) to other stocks including North Atlantic Drilling Ltd. (NYSE:NADL), New America High Income Fund Inc. (NYSE:HYB), and Cutera, Inc. (NASDAQ:CUTR) to get a better sense of its popularity.
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To most shareholders, hedge funds are viewed as unimportant, outdated investment vehicles of yesteryear. While there are greater than an 8000 funds in operation today, We choose to focus on the bigwigs of this club, about 700 funds. It is estimated that this group of investors oversees the lion’s share of the smart money’s total asset base, and by monitoring their unrivaled equity investments, Insider Monkey has unsheathed numerous investment strategies that have historically outpaced the market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, let’s go over the fresh action regarding Five9 Inc (NASDAQ:FIVN).
How are hedge funds trading Five9 Inc (NASDAQ:FIVN)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decrease of 46% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Portolan Capital Management, managed by George McCabe, holds the largest position in Five9 Inc (NASDAQ:FIVN). Portolan Capital Management has a $5.4 million position in the stock, comprising 0.7% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $1.6 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism comprise Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group, and D. E. Shaw’s D E Shaw.
Due to the fact that Five9 Inc (NASDAQ:FIVN) has faced a declination in interest from hedge fund managers, it’s safe to say that there were a few funds who sold off their full holdings in the third quarter. At the top of the heap, Brad Gerstner’s Altimeter Capital Management said goodbye to the biggest investment of all the hedgies monitored by Insider Monkey, comprising close to $3.1 million in stock, and Josh Goldberg’s G2 Investment Partners Management was right behind this move, as the fund cut about $1.4 million worth of shares. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 6 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Five9 Inc (NASDAQ:FIVN). These stocks are North Atlantic Drilling Ltd. (NYSE:NADL), New America High Income Fund Inc. (NYSE:HYB), Cutera, Inc. (NASDAQ:CUTR), and Garnero Group Acquisition Co (NASDAQ:GGAC). This group of stocks’ market values are similar to Five9 Inc (NASDAQ:FIVN)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NADL | 4 | 4822 | -1 |
| HYB | 4 | 6739 | 1 |
| CUTR | 13 | 43723 | -3 |
| GGAC | 7 | 25329 | 1 |
As you can see, these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $10 million in Five9 Inc (NASDAQ:FIVN)’s case. Cutera, Inc. (NASDAQ:CUTR) is the most popular stock in this table. On the other hand, North Atlantic Drilling Ltd. (NYSE:NADL) is the least popular one with only 4 bullish hedge fund positions. Five9 Inc (NASDAQ:FIVN) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Cutera, Inc. (NASDAQ:CUTR) might be a better candidate to consider a long position.