We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. We at Insider Monkey have gone over 835 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Tenable Holdings, Inc. (NASDAQ:TENB) based on that data.
Is Tenable Holdings, Inc. (NASDAQ:TENB) the right pick for your portfolio? Prominent investors are betting on the stock. The number of long hedge fund positions improved by 3 recently. Our calculations also showed that TENB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). TENB was in 22 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 19 hedge funds in our database with TENB holdings at the end of the previous quarter.
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.
David E. Shaw of D.E. Shaw
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the latest hedge fund action surrounding Tenable Holdings, Inc. (NASDAQ:TENB).
What have hedge funds been doing with Tenable Holdings, Inc. (NASDAQ:TENB)?
Heading into the first quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TENB over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Sylebra Capital Management, managed by Daniel Patrick Gibson, holds the biggest position in Tenable Holdings, Inc. (NASDAQ:TENB). Sylebra Capital Management has a $78 million position in the stock, comprising 3.1% of its 13F portfolio. The second largest stake is held by Greenvale Capital, led by Bruce Emery, holding a $47.9 million position; 11.8% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include D. E. Shaw’s D E Shaw, Andrew Kurita’s Kettle Hill Capital Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Greenvale Capital allocated the biggest weight to Tenable Holdings, Inc. (NASDAQ:TENB), around 11.82% of its 13F portfolio. Sylebra Capital Management is also relatively very bullish on the stock, setting aside 3.06 percent of its 13F equity portfolio to TENB.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the biggest position in Tenable Holdings, Inc. (NASDAQ:TENB). Millennium Management had $5.3 million invested in the company at the end of the quarter. C. Ashton Newhall and James Lim’s Greenspring Associates also made a $3.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, Peter Muller’s PDT Partners, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now review hedge fund activity in other stocks similar to Tenable Holdings, Inc. (NASDAQ:TENB). These stocks are PQ Group Holdings Inc. (NYSE:PQG), Mednax Inc. (NYSE:MD), Korn Ferry (NYSE:KFY), and Meritage Homes Corp (NYSE:MTH). This group of stocks’ market values resemble TENB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PQG | 4 | 55625 | -4 |
| MD | 33 | 488775 | 12 |
| KFY | 19 | 177220 | -8 |
| MTH | 29 | 249798 | 0 |
| Average | 21.25 | 242855 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $243 million. That figure was $211 million in TENB’s case. Mednax Inc. (NYSE:MD) is the most popular stock in this table. On the other hand PQ Group Holdings Inc. (NYSE:PQG) is the least popular one with only 4 bullish hedge fund positions. Tenable Holdings, Inc. (NASDAQ:TENB) 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 13.0% in 2020 through April 6th but still beat the market by 4.2 percentage points. Hedge funds were also right about betting on TENB as the stock returned -10.2% in 2020 (through April 6th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
