The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 867 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30th holdings, data that is available nowhere else. Should you consider ServiceNow Inc (NYSE:NOW) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
ServiceNow Inc (NYSE:NOW) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. ServiceNow Inc (NYSE:NOW) was in 87 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 98. Our calculations also showed that NOW ranked 28th among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Ole Andreas Halvorsen of Viking Global
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 take a peek at the key hedge fund action encompassing ServiceNow Inc (NYSE:NOW).
Do Hedge Funds Think NOW Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 87 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NOW over the last 25 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Tiger Global Management LLC, managed by Chase Coleman, holds the largest position in ServiceNow Inc (NYSE:NOW). Tiger Global Management LLC has a $1.3729 billion position in the stock, comprising 2.6% of its 13F portfolio. Sitting at the No. 2 spot is Lone Pine Capital, which holds a $1.3652 billion position; 4.6% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish include Christopher Lyle’s SCGE Management, and Andreas Halvorsen’s Viking Global. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to ServiceNow Inc (NYSE:NOW), around 11.54% of its 13F portfolio. Aravt Global is also relatively very bullish on the stock, setting aside 8.7 percent of its 13F equity portfolio to NOW.
Judging by the fact that ServiceNow Inc (NYSE:NOW) has faced falling interest from the smart money, it’s easy to see that there was a specific group of funds that slashed their entire stakes heading into Q4. Intriguingly, Zach Schreiber’s Point State Capital sold off the biggest stake of the 750 funds tracked by Insider Monkey, totaling an estimated $55.8 million in call options, and Noam Gottesman’s GLG Partners was right behind this move, as the fund dumped about $27.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ServiceNow Inc (NYSE:NOW) but similarly valued. These stocks are Sanofi (NYSE:SNY), American Tower Corporation (NYSE:AMT), Amgen, Inc. (NASDAQ:AMGN), Toronto-Dominion Bank (NYSE:TD), Intuitive Surgical, Inc. (NASDAQ:ISRG), Snap Inc. (NYSE:SNAP), and Applied Materials, Inc. (NASDAQ:AMAT). This group of stocks’ market caps are closest to NOW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNY | 19 | 1287779 | 3 |
| AMT | 61 | 4474779 | 6 |
| AMGN | 52 | 1448267 | -1 |
| TD | 17 | 294336 | 0 |
| ISRG | 61 | 3536259 | 1 |
| SNAP | 78 | 6739225 | 14 |
| AMAT | 68 | 4320480 | -5 |
| Average | 50.9 | 3157304 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 50.9 hedge funds with bullish positions and the average amount invested in these stocks was $3157 million. That figure was $7528 million in NOW’s case. Snap Inc. (NYSE:SNAP) is the most popular stock in this table. On the other hand Toronto-Dominion Bank (NYSE:TD) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks ServiceNow Inc (NYSE:NOW) is more popular among hedge funds. Our overall hedge fund sentiment score for NOW is 77.6. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately NOW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NOW were disappointed as the stock returned 4.1% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Servicenow Inc. (NYSE:NOW)
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Disclosure: None. This article was originally published at Insider Monkey.
