Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Okta, Inc. (NASDAQ:OKTA) to find out whether there were any major changes in hedge funds’ views.
Is OKTA stock a buy or sell? The smart money was turning bullish. The number of long hedge fund positions improved by 10 lately. Okta, Inc. (NASDAQ:OKTA) was in 61 hedge funds’ portfolios at the end of December. The all time high for this statistic is 60. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that OKTA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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Do Hedge Funds Think OKTA Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 61 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 39 hedge funds with a bullish position in OKTA a year ago. So, let’s check out 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 Okta, Inc. (NASDAQ:OKTA), with a stake worth $397.2 million reported as of the end of December. Trailing SCGE Management was Alkeon Capital Management, which amassed a stake valued at $330.2 million. Zevenbergen Capital Investments, Arrowstreet Capital, and Steadfast 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 SQN Investors allocated the biggest weight to Okta, Inc. (NASDAQ:OKTA), around 6.3% of its 13F portfolio. Night Owl Capital Management is also relatively very bullish on the stock, dishing out 5.27 percent of its 13F equity portfolio to OKTA.
Now, key money managers were breaking ground themselves. Steadfast Capital Management, managed by Robert Pitts, initiated the biggest position in Okta, Inc. (NASDAQ:OKTA). Steadfast Capital Management had $155.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $25.8 million investment in the stock during the quarter. The other funds with brand new OKTA positions are Amit Nitin Doshi’s Harbor Spring Capital, Suraj Parkash Chopra’s Force Hill Capital Management, and Amir Mokari’s Emerson Point Capital.
Let’s also examine hedge fund activity in other stocks similar to Okta, Inc. (NASDAQ:OKTA). We will take a look at Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), O’Reilly Automotive Inc (NASDAQ:ORLY), Yum! Brands, Inc. (NYSE:YUM), Carrier Global Corporation (NYSE:CARR), American International Group Inc (NYSE:AIG), Banco Santander (Brasil) SA (NYSE:BSBR), and Mizuho Financial Group Inc. (NYSE:MFG). This group of stocks’ market values are closest to OKTA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BBVA | 9 | 196955 | -1 |
| ORLY | 49 | 2416443 | -9 |
| YUM | 33 | 1199106 | -9 |
| CARR | 52 | 2284818 | 3 |
| AIG | 41 | 2081359 | 3 |
| BSBR | 6 | 6844 | 1 |
| MFG | 5 | 14769 | 0 |
| Average | 27.9 | 1171471 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.9 hedge funds with bullish positions and the average amount invested in these stocks was $1171 million. That figure was $2309 million in OKTA’s case. Carrier Global Corporation (NYSE:CARR) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Okta, Inc. (NASDAQ:OKTA) is more popular among hedge funds. Our overall hedge fund sentiment score for OKTA is 90. 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 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 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately OKTA wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on OKTA were disappointed as the stock returned -16% since the end of the fourth quarter (through 3/19) 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 most of these stocks already outperformed the market since 2019.
Follow Okta Inc. (NASDAQ:OKTA)
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Disclosure: None. This article was originally published at Insider Monkey.
