As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about HubSpot Inc (NYSE:HUBS).
Is HUBS a good stock to buy? HubSpot Inc (NYSE:HUBS) shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. HubSpot Inc (NYSE:HUBS) was in 48 hedge funds’ portfolios at the end of September. The all time high for this statistic is 54. Our calculations also showed that HUBS 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 we’re going to analyze the key hedge fund action encompassing HubSpot Inc (NYSE:HUBS).
Alex Sacerdote of Whale Rock Capital Management
Do Hedge Funds Think HUBS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 48 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HUBS over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, SCGE Management was the largest shareholder of HubSpot Inc (NYSE:HUBS), with a stake worth $951.9 million reported as of the end of September. Trailing SCGE Management was Whale Rock Capital Management, which amassed a stake valued at $549.2 million. Polar Capital, SQN Investors, and Hitchwood Capital 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 North Peak Capital allocated the biggest weight to HubSpot Inc (NYSE:HUBS), around 14.12% of its 13F portfolio. SCGE Management is also relatively very bullish on the stock, dishing out 8.83 percent of its 13F equity portfolio to HUBS.
Because HubSpot Inc (NYSE:HUBS) has witnessed bearish sentiment from hedge fund managers, logic holds that there exists a select few money managers that decided to sell off their entire stakes heading into Q4. At the top of the heap, D. E. Shaw’s D E Shaw sold off the biggest position of all the hedgies watched by Insider Monkey, worth about $87.9 million in stock. Gabriel Plotkin’s fund, Melvin Capital Management, also dumped its stock, about $58.3 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 6 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to HubSpot Inc (NYSE:HUBS). We will take a look at HP Inc. (NYSE:HPQ), The Williams Companies, Inc. (NYSE:WMB), West Pharmaceutical Services Inc. (NYSE:WST), Liberty Broadband Corp (NASDAQ:LBRDK), LyondellBasell Industries NV (NYSE:LYB), Brown-Forman Corporation (NYSE:BF), and MongoDB, Inc. (NASDAQ:MDB). This group of stocks’ market values match HUBS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HPQ | 34 | 1043926 | -5 |
| WMB | 40 | 658659 | 1 |
| WST | 29 | 794549 | -2 |
| LBRDK | 63 | 7101088 | 0 |
| LYB | 39 | 676597 | -2 |
| BF | 31 | 1656640 | 0 |
| MDB | 47 | 2171957 | 3 |
| Average | 40.4 | 2014774 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.4 hedge funds with bullish positions and the average amount invested in these stocks was $2015 million. That figure was $2865 million in HUBS’s case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand West Pharmaceutical Services Inc. (NYSE:WST) is the least popular one with only 29 bullish hedge fund positions. HubSpot Inc (NYSE:HUBS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HUBS is 53.6. 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 HUBS as the stock returned 19.3% 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.
