Is HubSpot Inc (NYSE:HUBS) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
HubSpot Inc (NYSE:HUBS) investors should pay attention to a decrease in enthusiasm from smart money in recent months. Our calculations also showed that HUBS isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to take a glance at the recent hedge fund action encompassing HubSpot Inc (NYSE:HUBS).
How have hedgies been trading HubSpot Inc (NYSE:HUBS)?
At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the second quarter of 2018. By comparison, 16 hedge funds held shares or bullish call options in HUBS heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in HubSpot Inc (NYSE:HUBS) was held by SCGE Management, which reported holding $132.6 million worth of stock at the end of September. It was followed by Alkeon Capital Management with a $83.7 million position. Other investors bullish on the company included Two Sigma Advisors, Renaissance Technologies, and Polar Capital.
Due to the fact that HubSpot Inc (NYSE:HUBS) has experienced a decline in interest from hedge fund managers, it’s safe to say that there exists a select few fund managers who sold off their positions entirely last quarter. At the top of the heap, Alex Sacerdote’s Whale Rock Capital Management sold off the largest investment of the 700 funds watched by Insider Monkey, valued at close to $64.1 million in stock, and George Soros’s Soros Fund Management was right behind this move, as the fund cut about $16.6 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to HubSpot Inc (NYSE:HUBS). These stocks are CIT Group Inc. (NYSE:CIT), Brunswick Corporation (NYSE:BC), Genpact Limited (NYSE:G), and ICU Medical, Inc. (NASDAQ:ICUI). All of these stocks’ market caps resemble HUBS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CIT | 25 | 899403 | -1 |
| BC | 34 | 794302 | 4 |
| G | 21 | 547304 | 0 |
| ICUI | 35 | 566997 | 2 |
| Average | 28.75 | 702002 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $702 million. That figure was $441 million in HUBS’s case. ICU Medical, Inc. (NASDAQ:ICUI) is the most popular stock in this table. On the other hand Genpact Limited (NYSE:G) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks HubSpot Inc (NYSE:HUBS) is even less popular than G. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None. This article was originally published at Insider Monkey.
