Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Five9 Inc (NASDAQ:FIVN) was in 23 hedge funds’ portfolios at the end of September. FIVN has seen an increase in hedge fund sentiment lately. There were 16 hedge funds in our database with FIVN holdings at the end of the previous quarter. At the end of this article we will also compare FIVN to other stocks including Flotek Industries Inc (NYSE:FTK), Deltic Timber Corp (NYSE:DEL), and CF Corp (NASDAQ:CFCO) to get a better sense of its popularity.
Follow Five9 Inc. (NASDAQ:FIVN)
Follow Five9 Inc. (NASDAQ:FIVN)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Hedge fund activity in Five9 Inc (NASDAQ:FIVN)
Heading into the fourth quarter of 2016, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, up by 44% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in FIVN at the beginning of this year. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Brian Ashford-Russell and Tim Woolley’s Polar Capital has the biggest position in Five9 Inc (NASDAQ:FIVN), worth close to $21.9 million. Sitting at the No. 2 spot is Renaissance Technologies, holding a $19.5 million position. Some other hedge funds and institutional investors that are bullish include Principal Global Investors’ Columbus Circle Investors, Paul Marshall and Ian Wace’s Marshall Wace LLP and Mark Coe’s Coe Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, specific money managers have been driving this bullishness. Marshall Wace LLP, led by Paul Marshall and Ian Wace, established the most valuable position in Five9 Inc (NASDAQ:FIVN). Marshall Wace LLP had $8.6 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $3.9 million investment in the stock during the quarter. The following funds were also among the new FIVN investors: Josh Goldberg’s G2 Investment Partners Management, Ken Grossman and Glen Schneider’s SG Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Five9 Inc (NASDAQ:FIVN) but similarly valued. These stocks are Flotek Industries Inc (NYSE:FTK), Deltic Timber Corp (NYSE:DEL), CF Corp (NASDAQ:CFCO), and Retrophin Inc (NASDAQ:RTRX). This group of stocks’ market valuations are similar to FIVN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FTK | 16 | 167644 | 5 |
| DEL | 4 | 135423 | 0 |
| CFCO | 23 | 414166 | 2 |
| RTRX | 23 | 400233 | 5 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $279 million. That figure was $117 million in FIVN’s case. CF Corp (NASDAQ:CFCO) is the most popular stock in this table. On the other hand Deltic Timber Corp (NYSE:DEL) is the least popular one with only 4 bullish hedge fund positions. Five9 Inc (NASDAQ:FIVN) 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 CFCO might be a better candidate to consider taking a long position in.
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