Here is What Hedge Funds Think About New Relic Inc (NEWR)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about New Relic Inc (NYSE:NEWR) in this article.

New Relic Inc (NYSE:NEWR) has experienced an increase in hedge fund sentiment of late. New Relic Inc (NYSE:NEWR) was in 30 hedge funds’ portfolios at the end of September. The all time high for this statistic is 44. There were 29 hedge funds in our database with NEWR positions at the end of the second quarter. Our calculations also showed that NEWR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to go over the key hedge fund action surrounding New Relic Inc (NYSE:NEWR).

Paul Marshall of Marshall Wace

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

Heading into the fourth quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NEWR over the last 25 quarters. So, let’s see 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, Mick Hellman’s HMI Capital has the number one position in New Relic Inc (NYSE:NEWR), worth close to $377.4 million, corresponding to 11.3% of its total 13F portfolio. The second largest stake is held by David Goel and Paul Ferri of Matrix Capital Management, with a $358.9 million position; 4.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism comprise Ricky Sandler’s Eminence Capital, Glenn W. Welling’s Engaged Capital and Constantinos J. Christofilis’s Archon Capital Management. In terms of the portfolio weights assigned to each position HMI Capital allocated the biggest weight to New Relic Inc (NYSE:NEWR), around 11.32% of its 13F portfolio. Engaged Capital is also relatively very bullish on the stock, setting aside 8.25 percent of its 13F equity portfolio to NEWR.

Now, specific money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in New Relic Inc (NYSE:NEWR). Marshall Wace LLP had $3.9 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $3.1 million position during the quarter. The following funds were also among the new NEWR investors: Jinghua Yan’s TwinBeech Capital, Dmitry Balyasny’s Balyasny Asset Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as New Relic Inc (NYSE:NEWR) but similarly valued. These stocks are Tripadvisor Inc (NASDAQ:TRIP), National Vision Holdings, Inc. (NASDAQ:EYE), Lancaster Colony Corporation (NASDAQ:LANC), Simpson Manufacturing Co, Inc. (NYSE:SSD), Shoals Technologies Group, Inc. (NASDAQ:SHLS), Papa John’s International, Inc. (NASDAQ:PZZA), and Shell Midstream Partners LP (NYSE:SHLX). All of these stocks’ market caps are closest to NEWR’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $355 million. That figure was $1407 million in NEWR’s case. Tripadvisor Inc (NASDAQ:TRIP) is the most popular stock in this table. On the other hand Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 6 bullish hedge fund positions. New Relic Inc (NYSE:NEWR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NEWR is 70.9. 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 gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on NEWR as the stock returned 54.4% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.