Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about ZoomInfo Technologies Inc. (NASDAQ:ZI) in this article.
ZoomInfo Technologies Inc. (NASDAQ:ZI) was in 35 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ZI investors should pay attention to an increase in hedge fund interest of late. There were 24 hedge funds in our database with ZI positions at the end of the first quarter. Our calculations also showed that ZI isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 79 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.
Ole Andreas Halvorsen of Viking Global
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. 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. 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 take a gander at the new hedge fund action regarding ZoomInfo Technologies Inc. (NASDAQ:ZI).
Do Hedge Funds Think ZI Is A Good Stock To Buy Now?
At the end of June, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 46% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in ZI a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, 0 was the largest shareholder of ZoomInfo Technologies Inc. (NASDAQ:ZI), with a stake worth $136.2 million reported as of the end of June. Trailing Citadel Investment Group was Alkeon Capital Management, which amassed a stake valued at $135.3 million. Viking Global, Shannon River Fund Management, and Balyasny Asset 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 Shannon River Fund Management allocated the biggest weight to ZoomInfo Technologies Inc. (NASDAQ:ZI), around 4.44% of its 13F portfolio. One Fin Capital Management is also relatively very bullish on the stock, earmarking 1.85 percent of its 13F equity portfolio to ZI.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Viking Global, managed by Andreas Halvorsen, assembled the largest position in ZoomInfo Technologies Inc. (NASDAQ:ZI). Viking Global had $124.2 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $44 million position during the quarter. The following funds were also among the new ZI investors: Brandon Haley’s Holocene Advisors, Kevin Cottrell and Chris LaSusa’s KCL Capital, and Michel Massoud’s Melqart Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ZoomInfo Technologies Inc. (NASDAQ:ZI) but similarly valued. We will take a look at Logitech International SA (NASDAQ:LOGI), FirstEnergy Corp. (NYSE:FE), PG&E Corporation (NYSE:PCG), SK Telecom Co., Ltd. (NYSE:SKM), Seagate Technology plc (NASDAQ:STX), KeyCorp (NYSE:KEY), and Entergy Corporation (NYSE:ETR). All of these stocks’ market caps are similar to ZI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LOGI | 20 | 526968 | 5 |
| FE | 36 | 1704357 | -15 |
| PCG | 64 | 4663822 | -1 |
| SKM | 8 | 68342 | 0 |
| STX | 31 | 1919802 | 4 |
| KEY | 40 | 443140 | -1 |
| ETR | 31 | 595450 | 0 |
| Average | 32.9 | 1417412 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.9 hedge funds with bullish positions and the average amount invested in these stocks was $1417 million. That figure was $670 million in ZI’s case. PG&E Corporation (NYSE:PCG) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 8 bullish hedge fund positions. ZoomInfo Technologies Inc. (NASDAQ:ZI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZI is 64.1. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on ZI as the stock returned 19.9% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Zoominfo Technologies Inc. (NASDAQ:ZI)
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Disclosure: None. This article was originally published at Insider Monkey.
