Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Okta, Inc. (NASDAQ:OKTA)? The smart money sentiment can provide an answer to this question.
Is Okta, Inc. (NASDAQ:OKTA) a healthy stock for your portfolio? The smart money is becoming hopeful. The number of long hedge fund bets went up by 10 recently. Our calculations also showed that OKTA isn’t among the 30 most popular stocks among hedge funds. OKTA was in 49 hedge funds’ portfolios at the end of the third quarter of 2019. There were 39 hedge funds in our database with OKTA positions at the end of the previous quarter.
To most traders, hedge funds are perceived as unimportant, old financial tools of the past. While there are more than 8000 funds trading today, Our experts hone in on the crème de la crème of this group, around 750 funds. These money managers manage the lion’s share of the smart money’s total asset base, and by following their unrivaled picks, Insider Monkey has unearthed several investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Stanley Druckenmiller of Duquesne Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s go over the key hedge fund action encompassing Okta, Inc. (NASDAQ:OKTA).
Hedge fund activity in Okta, Inc. (NASDAQ:OKTA)
Heading into the fourth quarter of 2019, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from the previous quarter. The graph below displays the number of hedge funds with bullish position in OKTA over the last 17 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, Alkeon Capital Management, managed by Panayotis Takis Sparaggis, holds the number one position in Okta, Inc. (NASDAQ:OKTA). Alkeon Capital Management has a $203 million position in the stock, comprising 0.7% of its 13F portfolio. Coming in second is Whale Rock Capital Management, managed by Alex Sacerdote, which holds a $184 million position; the fund has 3.4% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of Christopher Lyle’s SCGE Management, Steve Cohen’s Point72 Asset Management and Philippe Laffont’s Coatue Management. In terms of the portfolio weights assigned to each position Center Lake Capital allocated the biggest weight to Okta, Inc. (NASDAQ:OKTA), around 9.75% of its portfolio. SCGE Management is also relatively very bullish on the stock, earmarking 5.76 percent of its 13F equity portfolio to OKTA.
With a general bullishness amongst the heavyweights, some big names have jumped into Okta, Inc. (NASDAQ:OKTA) headfirst. Holocene Advisors, managed by Brandon Haley, assembled the most valuable position in Okta, Inc. (NASDAQ:OKTA). Holocene Advisors had $55.8 million invested in the company at the end of the quarter. Amish Mehta’s SQN Investors also initiated a $33 million position during the quarter. The other funds with new positions in the stock are Stanley Druckenmiller’s Duquesne Capital, Benjamin A. Smith’s Laurion Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Okta, Inc. (NASDAQ:OKTA) but similarly valued. These stocks are Godaddy Inc (NYSE:GDDY), iQIYI, Inc. (NASDAQ:IQ), Wheaton Precious Metals Corp. (NYSE:WPM), and Teledyne Technologies Incorporated (NYSE:TDY). This group of stocks’ market caps are similar to OKTA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GDDY | 48 | 2545499 | 4 |
| IQ | 22 | 966821 | 0 |
| WPM | 27 | 326903 | 8 |
| TDY | 29 | 686123 | 3 |
| Average | 31.5 | 1131337 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.5 hedge funds with bullish positions and the average amount invested in these stocks was $1131 million. That figure was $1121 million in OKTA’s case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand iQIYI, Inc. (NASDAQ:IQ) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Okta, Inc. (NASDAQ:OKTA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Hedge funds were also right about betting on OKTA as the stock returned 29.7% during Q4 (through 11/22) 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.
Disclosure: None. This article was originally published at Insider Monkey.
