Hedge Funds Are Cashing Out Of Alteryx, Inc. (AYX)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Alteryx, Inc. (NYSE:AYX).

Alteryx, Inc. (NYSE:AYX) has experienced a decrease in support from the world’s most elite money managers of late. Alteryx, Inc. (NYSE:AYX) was in 35 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 48. There were 42 hedge funds in our database with AYX holdings at the end of December. Our calculations also showed that AYX isn’t among the 30 most popular stocks among hedge funds (click for Q1 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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

John Overdeck of Two Sigma Advisors

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 battery 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. Keeping this in mind we’re going to check out the latest hedge fund action regarding Alteryx, Inc. (NYSE:AYX).

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

At Q1’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in AYX over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Among these funds, Bares Capital Management held the most valuable stake in Alteryx, Inc. (NYSE:AYX), which was worth $322.3 million at the end of the fourth quarter. On the second spot was Alkeon Capital Management which amassed $133.3 million worth of shares. Abdiel Capital Advisors, Citadel Investment Group, and Citadel Investment Group 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 Bares Capital Management allocated the biggest weight to Alteryx, Inc. (NYSE:AYX), around 6.03% of its 13F portfolio. Abdiel Capital Advisors is also relatively very bullish on the stock, setting aside 3.38 percent of its 13F equity portfolio to AYX.

Due to the fact that Alteryx, Inc. (NYSE:AYX) has witnessed falling interest from the smart money, we can see that there exists a select few money managers who sold off their entire stakes in the first quarter. Interestingly, Philippe Laffont’s Coatue Management sold off the largest stake of all the hedgies monitored by Insider Monkey, worth an estimated $377.8 million in stock. Steve Cohen’s fund, Point72 Asset Management, also sold off its stock, about $22.2 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 7 funds in the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Alteryx, Inc. (NYSE:AYX) but similarly valued. These stocks are Iridium Communications Inc. (NASDAQ:IRDM), Tenet Healthcare Corp (NYSE:THC), Evercore Inc. (NYSE:EVR), Nextera Energy Partners LP (NYSE:NEP), Tandem Diabetes Care Inc (NASDAQ:TNDM), Douglas Emmett, Inc. (NYSE:DEI), and SolarWinds Corporation (NYSE:SWI). This group of stocks’ market values are closest to AYX’s market value.

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As you can see these stocks had an average of 24.3 hedge funds with bullish positions and the average amount invested in these stocks was $785 million. That figure was $750 million in AYX’s case. Tenet Healthcare Corp (NYSE:THC) is the most popular stock in this table. On the other hand Douglas Emmett, Inc. (NYSE:DEI) is the least popular one with only 14 bullish hedge fund positions. Alteryx, Inc. (NYSE:AYX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AYX is 61.9. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on AYX, though not to the same extent, as the stock returned 7.8% since Q1 (through June 25th) and outperformed the market as well.

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Disclosure: None. This article was originally published at Insider Monkey.