Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published this article and predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits.
Is CrowdStrike Holdings, Inc. (NASDAQ:CRWD) ready to rally soon? Money managers are in an optimistic mood. The number of bullish hedge fund positions rose by 19 recently. Our calculations also showed that CRWD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). CRWD was in 48 hedge funds’ portfolios at the end of December. There were 29 hedge funds in our database with CRWD positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Steven Cohen of Point72 Asset Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind let’s take a gander at the latest hedge fund action encompassing CrowdStrike Holdings, Inc. (NASDAQ:CRWD).
What have hedge funds been doing with CrowdStrike Holdings, Inc. (NASDAQ:CRWD)?
Heading into the first quarter of 2020, a total of 48 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 66% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in CRWD a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Point72 Asset Management held the most valuable stake in CrowdStrike Holdings, Inc. (NASDAQ:CRWD), which was worth $87.1 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $64.7 million worth of shares. Whale Rock Capital Management, Balyasny Asset Management, and Alyeska 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 Element Capital Management allocated the biggest weight to CrowdStrike Holdings, Inc. (NASDAQ:CRWD), around 7.24% of its 13F portfolio. Light Street Capital is also relatively very bullish on the stock, designating 2.7 percent of its 13F equity portfolio to CRWD.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most outsized position in CrowdStrike Holdings, Inc. (NASDAQ:CRWD). Balyasny Asset Management had $48 million invested in the company at the end of the quarter. Glen Kacher’s Light Street Capital also made a $45.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Jeffrey Talpins’s Element Capital Management, David Fiszel’s Honeycomb Asset Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CrowdStrike Holdings, Inc. (NASDAQ:CRWD) but similarly valued. We will take a look at E*TRADE Financial Corporation (NASDAQ:ETFC), Reinsurance Group of America Inc (NYSE:RGA), Textron Inc. (NYSE:TXT), and FactSet Research Systems Inc. (NYSE:FDS). This group of stocks’ market caps are closest to CRWD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETFC | 48 | 946730 | 4 |
| RGA | 27 | 412374 | 1 |
| TXT | 30 | 859950 | 5 |
| FDS | 24 | 225368 | 3 |
| Average | 32.25 | 611106 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $611 million. That figure was $613 million in CRWD’s case. E*TRADE Financial Corporation (NASDAQ:ETFC) is the most popular stock in this table. On the other hand FactSet Research Systems Inc. (NYSE:FDS) is the least popular one with only 24 bullish hedge fund positions. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 12.9% in 2020 through March 9th but still beat the market by 1.9 percentage points. Hedge funds were also right about betting on CRWD as the stock returned -8.3% during the first quarter (through March 9th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
