Is PD Stock A Buy or Sell?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of PagerDuty, Inc. (NYSE:PD).

Is PD stock a buy? PagerDuty, Inc. (NYSE:PD) has seen a decrease in hedge fund interest of late. PagerDuty, Inc. (NYSE:PD) was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 30. There were 28 hedge funds in our database with PD positions at the end of the third quarter. Our calculations also showed that PD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Robert G. Moses of RGM Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s take a peek at the fresh hedge fund action surrounding PagerDuty, Inc. (NYSE:PD).

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

At Q4’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the third quarter of 2020. On the other hand, there were a total of 15 hedge funds with a bullish position in PD 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.

Of the funds tracked by Insider Monkey, Catherine D. Wood’s ARK Investment Management has the number one position in PagerDuty, Inc. (NYSE:PD), worth close to $481.5 million, corresponding to 1.3% of its total 13F portfolio. The second largest stake is held by RGM Capital, led by Robert G. Moses, holding a $53.9 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Brian Bares’s Bares Capital Management. In terms of the portfolio weights assigned to each position RGM Capital allocated the biggest weight to PagerDuty, Inc. (NYSE:PD), around 2.35% of its 13F portfolio. ARK Investment Management is also relatively very bullish on the stock, designating 1.28 percent of its 13F equity portfolio to PD.

Judging by the fact that PagerDuty, Inc. (NYSE:PD) has faced a decline in interest from hedge fund managers, it’s safe to say that there exists a select few hedge funds who were dropping their entire stakes by the end of the fourth quarter. Interestingly, David Atterbury’s Whetstone Capital Advisors dumped the biggest stake of all the hedgies tracked by Insider Monkey, totaling an estimated $16.5 million in stock. Sahm Adrangi’s fund, Kerrisdale Capital, also cut its stock, about $12.3 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds by the end of the fourth quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as PagerDuty, Inc. (NYSE:PD) but similarly valued. We will take a look at Vir Biotechnology, Inc. (NASDAQ:VIR), TTEC Holdings, Inc. (NASDAQ:TTEC), Spectrum Brands Holdings, Inc. (NYSE:SPB), UFP Industries, Inc. (NASDAQ:UFPI), BRF SA (NYSE:BRFS), Insmed Incorporated (NASDAQ:INSM), and GW Pharmaceuticals plc (NASDAQ:GWPH). This group of stocks’ market values match PD’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $227 million. That figure was $731 million in PD’s case. Spectrum Brands Holdings, Inc. (NYSE:SPB) is the most popular stock in this table. On the other hand Vir Biotechnology, Inc. (NASDAQ:VIR) is the least popular one with only 5 bullish hedge fund positions. PagerDuty, Inc. (NYSE:PD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PD is 64. 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 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately PD wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on PD were disappointed as the stock returned -2.4% since the end of December (through 4/19) 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 many of these stocks already outperformed the market since 2019.

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