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 Splunk Inc (NASDAQ:SPLK).
Is SPLK stock a buy or sell? Splunk Inc (NASDAQ:SPLK) was in 47 hedge funds’ portfolios at the end of December. The all time high for this statistic is 49. SPLK has experienced an increase in activity from the world’s largest hedge funds recently. There were 44 hedge funds in our database with SPLK positions at the end of the third quarter. Our calculations also showed that SPLK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In today’s marketplace there are numerous signals stock market investors can use to appraise publicly traded companies. A pair of the most innovative signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outclass the S&P 500 by a superb amount (see the details here).
Glen Kacher of Light Street Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. 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 homepage (or at the end of this article). Keeping this in mind let’s view the fresh hedge fund action encompassing Splunk Inc (NASDAQ:SPLK).
Do Hedge Funds Think SPLK Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. By comparison, 38 hedge funds held shares or bullish call options in SPLK a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Catherine D. Wood’s ARK Investment Management has the biggest position in Splunk Inc (NASDAQ:SPLK), worth close to $343.1 million, accounting for 0.9% of its total 13F portfolio. Coming in second is David Cohen and Harold Levy of Iridian Asset Management, with a $99.5 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain Michael Kahan and Jeremy Kahan’s North Peak Capital, David Goel and Paul Ferri’s Matrix Capital Management and Glen Kacher’s Light Street Capital. In terms of the portfolio weights assigned to each position North Peak Capital allocated the biggest weight to Splunk Inc (NASDAQ:SPLK), around 16.98% of its 13F portfolio. Whetstone Capital Advisors is also relatively very bullish on the stock, dishing out 7.08 percent of its 13F equity portfolio to SPLK.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Matrix Capital Management, managed by David Goel and Paul Ferri, created the most outsized position in Splunk Inc (NASDAQ:SPLK). Matrix Capital Management had $51 million invested in the company at the end of the quarter. Glen Kacher’s Light Street Capital also initiated a $44.7 million position during the quarter. The other funds with new positions in the stock are Stuart J. Zimmer’s Zimmer Partners, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Canhui Ou’s One01 Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Splunk Inc (NASDAQ:SPLK) but similarly valued. We will take a look at NatWest Group plc (NYSE:NWG), Nutrien Ltd. (NYSE:NTR), Willis Towers Watson Public Limited Company (NASDAQ:WLTW), Mettler-Toledo International Inc. (NYSE:MTD), Sirius XM Holdings Inc (NASDAQ:SIRI), AutoZone, Inc. (NYSE:AZO), and Welltower Inc. (NYSE:WELL). This group of stocks’ market values resemble SPLK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NWG | 3 | 759 | 1 |
| NTR | 25 | 754698 | -1 |
| WLTW | 58 | 3245691 | 7 |
| MTD | 29 | 850200 | -1 |
| SIRI | 32 | 670253 | -5 |
| AZO | 44 | 1445833 | -9 |
| WELL | 26 | 538410 | 1 |
| Average | 31 | 1072263 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1072 million. That figure was $1036 million in SPLK’s case. Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 3 bullish hedge fund positions. Splunk Inc (NASDAQ:SPLK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SPLK is 76.8. 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 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately SPLK wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on SPLK were disappointed as the stock returned -20.5% since the end of December (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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
