Do Hedge Funds Love MongoDB, Inc. (MDB)?

In this article you are going to find out whether hedge funds think MongoDB, Inc. (NASDAQ:MDB) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

MongoDB, Inc. (NASDAQ:MDB) has experienced a decrease in activity from the world’s largest hedge funds in recent months. MongoDB, Inc. (NASDAQ:MDB) was in 44 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 46. There were 46 hedge funds in our database with MDB positions at the end of the first quarter. Our calculations also showed that MDB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Eashwar Krishnan of Tybourne Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a peek at the new hedge fund action surrounding MongoDB, Inc. (NASDAQ:MDB).

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

At the end of June, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MDB over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Whale Rock Capital Management was the largest shareholder of MongoDB, Inc. (NASDAQ:MDB), with a stake worth $457.4 million reported as of the end of June. Trailing Whale Rock Capital Management was Tybourne Capital Management, which amassed a stake valued at $225.8 million. SQN Investors, Citadel Investment Group, and SRS Investment Management 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 SQN Investors allocated the biggest weight to MongoDB, Inc. (NASDAQ:MDB), around 10.11% of its 13F portfolio. Akaris Global Partners is also relatively very bullish on the stock, earmarking 7.29 percent of its 13F equity portfolio to MDB.

Since MongoDB, Inc. (NASDAQ:MDB) has faced falling interest from hedge fund managers, it’s easy to see that there exists a select few money managers that elected to cut their full holdings in the second quarter. Intriguingly, Renaissance Technologies sold off the biggest investment of the 750 funds followed by Insider Monkey, valued at an estimated $62.8 million in stock. D. E. Shaw’s fund, D E Shaw, also sold off its stock, about $50.6 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds in the second quarter.

Let’s go over hedge fund activity in other stocks similar to MongoDB, Inc. (NASDAQ:MDB). We will take a look at CGI Inc. (NYSE:GIB), The Clorox Company (NYSE:CLX), Imperial Oil Limited (NYSE:IMO), Teradyne, Inc. (NYSE:TER), Hartford Financial Services Group Inc (NYSE:HIG), DISH Network Corp. (NASDAQ:DISH), and Qorvo Inc (NASDAQ:QRVO). This group of stocks’ market valuations are closest to MDB’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.9 hedge funds with bullish positions and the average amount invested in these stocks was $1330 million. That figure was $1694 million in MDB’s case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand CGI Inc. (NYSE:GIB) is the least popular one with only 14 bullish hedge fund positions. MongoDB, Inc. (NASDAQ:MDB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MDB is 72.2. 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 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on MDB as the stock returned 31.3% since the end of Q2 (through 10/1) 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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