In this article we will take a look at whether hedge funds think Confluent Inc. (NASDAQ:CFLT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Confluent Inc. (NASDAQ:CFLT) a buy right now? Hedge funds were becoming less hopeful. The number of long hedge fund bets shrunk by 3 in recent months. Confluent Inc. (NASDAQ:CFLT) was in 27 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that CFLT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to go over the new hedge fund action encompassing Confluent Inc. (NASDAQ:CFLT).
Glen Kacher of Light Street Capital
Do Hedge Funds Think CFLT Is A Good Stock To Buy Now?
At third quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in CFLT a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Confluent Inc. (NASDAQ:CFLT) was held by Coatue Management, which reported holding $413.4 million worth of stock at the end of September. It was followed by SCGE Management with a $168.1 million position. Other investors bullish on the company included Alkeon Capital Management, Altimeter Capital Management, and Light Street Capital. In terms of the portfolio weights assigned to each position Light Street Capital allocated the biggest weight to Confluent Inc. (NASDAQ:CFLT), around 4.56% of its 13F portfolio. Coatue Management is also relatively very bullish on the stock, dishing out 1.68 percent of its 13F equity portfolio to CFLT.
Due to the fact that Confluent Inc. (NASDAQ:CFLT) has faced falling interest from the entirety of the hedge funds we track, we can see that there exists a select few fund managers that elected to cut their full holdings in the third quarter. Interestingly, Israel Englander’s Millennium Management said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, worth an estimated $18.1 million in stock. Josh Resnick’s fund, Jericho Capital Asset Management, also sold off its stock, about $14.3 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 3 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Confluent Inc. (NASDAQ:CFLT). We will take a look at argenx SE (NASDAQ:ARGX), Novavax, Inc. (NASDAQ:NVAX), Royalty Pharma Plc (NASDAQ:RPRX), Just Eat Takeaway.com N.V. (NASDAQ:GRUB), United Airlines Holdings Inc (NASDAQ:UAL), Sociedad Química y Minera de Chile S.A. (NYSE:SQM), and Paylocity Holding Corp (NASDAQ:PCTY). This group of stocks’ market values are similar to CFLT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARGX | 28 | 1364285 | 1 |
| NVAX | 35 | 786706 | -2 |
| RPRX | 20 | 1961787 | 0 |
| GRUB | 18 | 204963 | -6 |
| UAL | 30 | 403253 | -9 |
| SQM | 26 | 211676 | 7 |
| PCTY | 27 | 740385 | 8 |
| Average | 26.3 | 810436 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $810 million. That figure was $1319 million in CFLT’s case. Novavax, Inc. (NASDAQ:NVAX) is the most popular stock in this table. On the other hand Just Eat Takeaway.com N.V. (NASDAQ:GRUB) is the least popular one with only 18 bullish hedge fund positions. Confluent Inc. (NASDAQ:CFLT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CFLT is 55.5. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Hedge funds were also right about betting on CFLT as the stock returned 12.2% since the end of Q3 (through 12/9) 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.
