Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of DocuSign, Inc. (NASDAQ:DOCU) based on that data.
DocuSign, Inc. (NASDAQ:DOCU) has seen an increase in hedge fund interest recently. Our calculations also showed that DOCU isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 44 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Andrew Sandler of Sandler Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. Also, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a glance at the new hedge fund action regarding DocuSign, Inc. (NASDAQ:DOCU).
What does smart money think about DocuSign, Inc. (NASDAQ:DOCU)?
At the end of the first quarter, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 42% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DOCU over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, D. E. Shaw’s D E Shaw has the largest position in DocuSign, Inc. (NASDAQ:DOCU), worth close to $368 million, corresponding to 0.6% of its total 13F portfolio. The second largest stake is held by Whale Rock Capital Management, led by Alex Sacerdote, holding a $170.9 million position; 2.3% of its 13F portfolio is allocated to the company. Other peers that are bullish encompass David Goel and Paul Ferri’s Matrix Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Josh Resnick’s Jericho Capital Asset Management. In terms of the portfolio weights assigned to each position Cowbird Capital allocated the biggest weight to DocuSign, Inc. (NASDAQ:DOCU), around 20.2% of its 13F portfolio. Cota Capital is also relatively very bullish on the stock, dishing out 13.39 percent of its 13F equity portfolio to DOCU.
As one would reasonably expect, key money managers were breaking ground themselves. Whale Rock Capital Management, managed by Alex Sacerdote, created the most outsized position in DocuSign, Inc. (NASDAQ:DOCU). Whale Rock Capital Management had $170.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $16.4 million position during the quarter. The following funds were also among the new DOCU investors: Andrew Sandler’s Sandler Capital Management, Larry Chen and Terry Zhang’s Tairen Capital, and Greg Eisner’s Engineers Gate Manager.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as DocuSign, Inc. (NASDAQ:DOCU) but similarly valued. We will take a look at Mettler-Toledo International Inc. (NYSE:MTD), LyondellBasell Industries NV (NYSE:LYB), AMETEK, Inc. (NYSE:AME), and Royal Bank of Scotland Group plc (NYSE:RBS). This group of stocks’ market caps resemble DOCU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTD | 31 | 616788 | 2 |
| LYB | 35 | 474610 | -5 |
| AME | 33 | 639873 | 1 |
| RBS | 5 | 13271 | 0 |
| Average | 26 | 436136 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $436 million. That figure was $1083 million in DOCU’s case. LyondellBasell Industries NV (NYSE:LYB) is the most popular stock in this table. On the other hand Royal Bank of Scotland Group plc (NYSE:RBS) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks DocuSign, Inc. (NASDAQ:DOCU) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on DOCU as the stock returned 43.9% so far in Q2 (through May 22nd) 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.
