Hedge Funds Keep Buying Elastic N.V. (ESTC)

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 at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article we look at what those investors think of Elastic N.V. (NYSE:ESTC).

Elastic N.V. (NYSE:ESTC) investors should be aware of an increase in hedge fund sentiment lately. Elastic N.V. (NYSE:ESTC) was in 55 hedge funds’ portfolios at the end of June. The all time high for this statistic is 52. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ESTC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Alex Sacerdote of Whale Rock Capital Management

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Do Hedge Funds Think ESTC Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 55 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from one quarter earlier. By comparison, 43 hedge funds held shares or bullish call options in ESTC a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Among these funds, Sylebra Capital Management held the most valuable stake in Elastic N.V. (NYSE:ESTC), which was worth $642.4 million at the end of the second quarter. On the second spot was Tiger Global Management LLC which amassed $585.9 million worth of shares. Whale Rock Capital Management, Marcho Partners, and Point72 Asset Management 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 Sylebra Capital Management allocated the biggest weight to Elastic N.V. (NYSE:ESTC), around 15.94% of its 13F portfolio. Greenhaven Road Investment Management is also relatively very bullish on the stock, dishing out 11.95 percent of its 13F equity portfolio to ESTC.

Now, specific money managers were leading the bulls’ herd. Whale Rock Capital Management, managed by Alex Sacerdote, assembled the most outsized position in Elastic N.V. (NYSE:ESTC). Whale Rock Capital Management had $322.9 million invested in the company at the end of the quarter. Gavin Baker’s Atreides Management also made a $83.9 million investment in the stock during the quarter. The following funds were also among the new ESTC investors: Glen Kacher’s Light Street Capital, Pasco Alfaro and Richard Turnure’s Miura Global Management, and Mark Coe’s Intrinsic Edge Capital.

Let’s now review hedge fund activity in other stocks similar to Elastic N.V. (NYSE:ESTC). These stocks are Masimo Corporation (NASDAQ:MASI), CBOE Global Markets Inc (NASDAQ:CBOE), Lennox International Inc. (NYSE:LII), W.R. Berkley Corporation (NYSE:WRB), Vedanta Ltd (NYSE:VEDL), Equitable Holdings, Inc. (NYSE:EQH), and Hasbro, Inc. (NASDAQ:HAS). This group of stocks’ market values are similar to ESTC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $612 million. That figure was $3062 million in ESTC’s case. Equitable Holdings, Inc. (NYSE:EQH) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Elastic N.V. (NYSE:ESTC) is more popular among hedge funds. Our overall hedge fund sentiment score for ESTC is 88. 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 returned 22.9% in 2021 through October 1st but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on ESTC as the stock returned 3.6% since the end of June (through 10/1) 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.