The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Sumo Logic, Inc. (NASDAQ:SUMO).
Is SUMO a good stock to buy now? Money managers were getting more bullish. The number of bullish hedge fund bets increased by 13 lately. Sumo Logic, Inc. (NASDAQ:SUMO) was in 13 hedge funds’ portfolios at the end of September. Our calculations also showed that SUMO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a large number of formulas investors have at their disposal to value their stock investments. Some of the less utilized formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can trounce the market by a significant margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Now let’s take a peek at the new hedge fund action regarding Sumo Logic, Inc. (NASDAQ:SUMO).
Do Hedge Funds Think SUMO Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13 from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in SUMO 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, Chase Coleman’s Tiger Global Management LLC has the most valuable position in Sumo Logic, Inc. (NASDAQ:SUMO), worth close to $117.5 million, accounting for 0.3% of its total 13F portfolio. Coming in second is Alta Park Capital, managed by Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali, which holds a $7.8 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism comprise Israel Englander’s Millennium Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Alex Sacerdote’s Whale Rock Capital Management. In terms of the portfolio weights assigned to each position Alta Park Capital allocated the biggest weight to Sumo Logic, Inc. (NASDAQ:SUMO), around 1.12% of its 13F portfolio. Pinz Capital is also relatively very bullish on the stock, setting aside 0.4 percent of its 13F equity portfolio to SUMO.
As industrywide interest jumped, some big names were leading the bulls’ herd. Tiger Global Management LLC, managed by Chase Coleman, established the most valuable position in Sumo Logic, Inc. (NASDAQ:SUMO). Tiger Global Management LLC had $117.5 million invested in the company at the end of the quarter. Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali’s Alta Park Capital also made a $7.8 million investment in the stock during the quarter. The following funds were also among the new SUMO investors: Israel Englander’s Millennium Management, Phill Gross and Robert Atchinson’s Adage Capital Management, and Alex Sacerdote’s Whale Rock Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Sumo Logic, Inc. (NASDAQ:SUMO). We will take a look at California Water Service Group (NYSE:CWT), Apple Hospitality REIT Inc (NYSE:APLE), Applied Industrial Technologies Inc (NYSE:AIT), Copa Holdings, S.A. (NYSE:CPA), Arcosa, Inc. (NYSE:ACA), SunPower Corporation (NASDAQ:SPWR), and Mesoblast Limited (NASDAQ:MESO). This group of stocks’ market valuations are similar to SUMO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CWT | 14 | 83115 | -2 |
| APLE | 14 | 79181 | 0 |
| AIT | 24 | 63259 | 9 |
| CPA | 24 | 203185 | 0 |
| ACA | 19 | 169792 | 3 |
| SPWR | 14 | 91257 | -2 |
| MESO | 3 | 2921 | 0 |
| Average | 16 | 98959 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $150 million in SUMO’s case. Applied Industrial Technologies Inc (NYSE:AIT) is the most popular stock in this table. On the other hand Mesoblast Limited (NASDAQ:MESO) is the least popular one with only 3 bullish hedge fund positions. Sumo Logic, Inc. (NASDAQ:SUMO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SUMO is 48.1. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on SUMO as the stock returned 33.5% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.