With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter of 2021. One of these stocks was C3.ai, Inc. (NYSE:AI).
Is AI a good stock to buy? C3.ai, Inc. (NYSE:AI) investors should pay attention to a decrease in hedge fund sentiment recently. C3.ai, Inc. (NYSE:AI) was in 24 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 37. There were 29 hedge funds in our database with AI positions at the end of the second quarter. Our calculations also showed that AI 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. Now let’s view the new hedge fund action surrounding C3.ai, Inc. (NYSE:AI).
Do Hedge Funds Think AI Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the second quarter of 2021. By comparison, 0 hedge funds held shares or bullish call options in AI a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chase Coleman’s Tiger Global Management LLC has the biggest position in C3.ai, Inc. (NYSE:AI), worth close to $46.3 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Tudor Investment Corp, managed by Paul Tudor Jones, which holds a $34.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers with similar optimism contain Renaissance Technologies, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Kayak Investment Partners allocated the biggest weight to C3.ai, Inc. (NYSE:AI), around 2.09% of its 13F portfolio. Centiva Capital is also relatively very bullish on the stock, setting aside 0.37 percent of its 13F equity portfolio to AI.
Because C3.ai, Inc. (NYSE:AI) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of fund managers who were dropping their full holdings heading into Q4. Interestingly, Philippe Laffont’s Coatue Management dumped the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at close to $48.7 million in stock, and Frank Fu’s CaaS Capital was right behind this move, as the fund sold off about $7.5 million worth. These transactions are important to note, as total hedge fund interest was cut by 5 funds heading into Q4.
Let’s now review hedge fund activity in other stocks similar to C3.ai, Inc. (NYSE:AI). We will take a look at Sterling Bancorp (NYSE:STL), The Chemours Company (NYSE:CC), National Fuel Gas Company (NYSE:NFG), Adaptive Biotechnologies Corporation (NASDAQ:ADPT), Dada Nexus Limited (NASDAQ:DADA), Blackstone Mortgage Trust Inc (NYSE:BXMT), and Seaboard Corporation (NYSE:SEB). This group of stocks’ market caps are closest to AI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STL | 17 | 252247 | 1 |
| CC | 38 | 548945 | 14 |
| NFG | 19 | 152900 | 7 |
| ADPT | 25 | 1775850 | -2 |
| DADA | 13 | 106594 | -5 |
| BXMT | 15 | 182001 | 3 |
| SEB | 13 | 103287 | 0 |
| Average | 20 | 445975 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $446 million. That figure was $199 million in AI’s case. The Chemours Company (NYSE:CC) is the most popular stock in this table. On the other hand Dada Nexus Limited (NASDAQ:DADA) is the least popular one with only 13 bullish hedge fund positions. C3.ai, Inc. (NYSE:AI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AI is 41.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately AI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AI were disappointed as the stock returned -30.8% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
