Is CSOD Stock A Buy or Sell?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Cornerstone OnDemand, Inc. (NASDAQ:CSOD).

Is CSOD stock a buy or sell? Cornerstone OnDemand, Inc. (NASDAQ:CSOD) has seen an increase in hedge fund interest recently. Cornerstone OnDemand, Inc. (NASDAQ:CSOD) was in 34 hedge funds’ portfolios at the end of December. The all time high for this statistic is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 24 hedge funds in our database with CSOD holdings at the end of September. Our calculations also showed that CSOD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

At the moment there are plenty of indicators shareholders use to value their holdings. A couple of the most under-the-radar indicators are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top hedge fund managers can outclass their index-focused peers by a very impressive margin (see the details here).

Robert Moses of RGM Capital

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

At the end of December, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 42% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CSOD over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

More specifically, Rivulet Capital was the largest shareholder of Cornerstone OnDemand, Inc. (NASDAQ:CSOD), with a stake worth $185.5 million reported as of the end of December. Trailing Rivulet Capital was RGM Capital, which amassed a stake valued at $131.3 million. P2 Capital Partners, Indaba Capital Management, and Two Sigma Advisors 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 Stepstone Group allocated the biggest weight to Cornerstone OnDemand, Inc. (NASDAQ:CSOD), around 11.41% of its 13F portfolio. Rivulet Capital is also relatively very bullish on the stock, earmarking 9.18 percent of its 13F equity portfolio to CSOD.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Greenhouse Funds, managed by Joe Milano, established the most outsized position in Cornerstone OnDemand, Inc. (NASDAQ:CSOD). Greenhouse Funds had $13.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $8 million investment in the stock during the quarter. The other funds with brand new CSOD positions are Israel Englander’s Millennium Management, Richard Schimel and Lawrence Sapanski’s Cinctive Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cornerstone OnDemand, Inc. (NASDAQ:CSOD) but similarly valued. These stocks are Broadstone Net Lease, Inc. (NYSE:BNL), Veracyte Inc (NASDAQ:VCYT), MaxLinear, Inc. (NYSE:MXL), Cogent Communications Holdings Inc. (NASDAQ:CCOI), Evertec Inc (NYSE:EVTC), Telecom Argentina S.A. (NYSE:TEO), and Outfront Media Inc. (REIT) (NYSE:OUT). This group of stocks’ market valuations are closest to CSOD’s market valuation.

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As you can see these stocks had an average of 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $292 million. That figure was $593 million in CSOD’s case. Outfront Media Inc. (REIT) (NYSE:OUT) is the most popular stock in this table. On the other hand Telecom Argentina S.A. (NYSE:TEO) is the least popular one with only 6 bullish hedge fund positions. Cornerstone OnDemand, Inc. (NASDAQ:CSOD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CSOD is 83.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately CSOD wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on CSOD were disappointed as the stock returned 1.5% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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