At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Smartsheet Inc. (NYSE:SMAR) makes for a good investment right now.
Smartsheet Inc. (NYSE:SMAR) investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. Smartsheet Inc. (NYSE:SMAR) was in 39 hedge funds’ portfolios at the end of March. The all time high for this statistic is 50. There were 45 hedge funds in our database with SMAR holdings at the end of December. Our calculations also showed that SMAR 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. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Alex Sacerdote of Whale Rock 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 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. With all of this in mind we’re going to review the recent hedge fund action surrounding Smartsheet Inc. (NYSE:SMAR).
Do Hedge Funds Think SMAR Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SMAR over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Whale Rock Capital Management held the most valuable stake in Smartsheet Inc. (NYSE:SMAR), which was worth $229.1 million at the end of the fourth quarter. On the second spot was Abdiel Capital Advisors which amassed $195.4 million worth of shares. Alkeon Capital Management, Foxhaven Asset Management, and 12 West Capital 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 Calixto Global Investors allocated the biggest weight to Smartsheet Inc. (NYSE:SMAR), around 14.42% of its 13F portfolio. ThornTree Capital Partners is also relatively very bullish on the stock, setting aside 6.45 percent of its 13F equity portfolio to SMAR.
Because Smartsheet Inc. (NYSE:SMAR) has faced falling interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of fund managers who were dropping their entire stakes last quarter. Interestingly, Brandon Haley’s Holocene Advisors dropped the biggest position of the 750 funds watched by Insider Monkey, worth about $40.4 million in stock. Sanjay Venkat’s fund, Jeneq Management, also dropped its stock, about $36 million worth. These moves are interesting, as total hedge fund interest fell by 6 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Smartsheet Inc. (NYSE:SMAR) but similarly valued. These stocks are SiteOne Landscape Supply, Inc. (NYSE:SITE), CubeSmart (NYSE:CUBE), Jefferies Financial Group Inc. (NYSE:JEF), PVH Corp (NYSE:PVH), InVitae Corporation (NYSE:NVTA), Cabot Oil & Gas Corporation (NYSE:COG), and JOYY Inc. (NASDAQ:YY). This group of stocks’ market valuations are closest to SMAR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SITE | 16 | 67390 | -1 |
| CUBE | 25 | 350765 | 1 |
| JEF | 38 | 700629 | 5 |
| PVH | 34 | 1234659 | -3 |
| NVTA | 34 | 2759303 | -1 |
| COG | 20 | 135171 | 1 |
| YY | 20 | 316827 | 0 |
| Average | 26.7 | 794963 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $795 million. That figure was $1490 million in SMAR’s case. Jefferies Financial Group Inc. (NYSE:JEF) is the most popular stock in this table. On the other hand SiteOne Landscape Supply, Inc. (NYSE:SITE) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Smartsheet Inc. (NYSE:SMAR) is more popular among hedge funds. Our overall hedge fund sentiment score for SMAR is 72.4. 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 returned 19.3% in 2021 through June 25th but still managed to beat the market by 4.8 percentage points. Hedge funds were also right about betting on SMAR as the stock returned 14.9% since the end of March (through 6/25) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
