Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of SolarWinds Inc (NYSE:SWI) based on that data.
SolarWinds Inc was in 23 hedge funds’ portfolios at the end of the third quarter of 2015. SWI investors should be aware of a decrease in activity from the world’s largest hedge funds of late. There were 27 hedge funds in our database with SWI holdings at the end of the previous quarter. At the end of this article we will also compare SWI to other stocks, including Synaptics, Incorporated (NASDAQ:SYNA), EnLink Midstream LLC (NYSE:ENLC), and ITT Corp (NYSE:ITT) to get a better sense of its popularity.
Follow Solarwinds Corporation (NYSE:SWI)
Follow Solarwinds Corporation (NYSE:SWI)
In the eyes of most stock holders, hedge funds are perceived as worthless, old investment tools of yesteryear. While there are over 8000 funds with their doors open today, We look at the moguls of this club, approximately 700 funds. Most estimates calculate that this group of people have their hands on most of the hedge fund industry’s total capital, and by tracking their unrivaled stock picks, Insider Monkey has deciphered numerous investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
With all of this in mind, we’re going to review the latest action encompassing SolarWinds Inc (NYSE:SWI).
What does the smart money think about SolarWinds Inc (NYSE:SWI)?
At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 15% from the second quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Farallon Capital, managed by Thomas Steyer, holds the biggest position in SolarWinds Inc (NYSE:SWI). The fund holds $95.7 million stake in the company, comprising 1.3% of its 13F portfolio. The second most bullish fund manager is Clifton S. Robbins of Blue Harbour Group, with a $71.9 million position; 2.2% of its 13F portfolio is allocated to the company. Other peers that hold long positions contain D. E. Shaw’s D E Shaw, Glenn J. Krevlin’s Glenhill Advisors and Eric Bannasch’s Cadian Capital.
Judging by the fact that SolarWinds Inc (NYSE:SWI) has experienced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers that elected to cut their entire stakes in the third quarter. Interestingly, Stephen Mandel’s Lone Pine Capital sold off the largest position of all the hedgies watched by Insider Monkey, totaling close to $116.2 million in stock. Karthik Sarma’s fund, SRS Investment Management, also cut its investment, about $110.7 million worth of SWI shares. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to SolarWinds Inc (NYSE:SWI). These stocks are Synaptics, Incorporated (NASDAQ:SYNA), EnLink Midstream LLC (NYSE:ENLC), ITT Corp (NYSE:ITT), and Methanex Corporation (USA) (NASDAQ:MEOH). All of these stocks’ market caps are similar to SWI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYNA | 18 | 115596 | -4 |
| ENLC | 10 | 58533 | -1 |
| ITT | 27 | 277938 | -3 |
| MEOH | 19 | 229003 | -3 |
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $170 million. That figure was a whooping $404 million in SWI’s case. ITT Corp (NYSE:ITT) is the most popular stock in this table, while EnLink Midstream LLC (NYSE:ENLC) is the laggard with only 10 bullish hedge fund positions. SolarWinds Inc (NYSE:SWI) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ITT might be a better candidate to consider a long position.
