Is SVMK Stock A Buy or Sell?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards SVMK Inc. (NASDAQ:SVMK) changed recently.

Is SVMK stock a buy? SVMK Inc. (NASDAQ:SVMK) has seen a decrease in hedge fund interest recently. SVMK Inc. (NASDAQ:SVMK) was in 32 hedge funds’ portfolios at the end of December. The all time high for this statistic is 33. There were 33 hedge funds in our database with SVMK positions at the end of the third quarter. Our calculations also showed that SVMK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Richard Driehaus of Driehaus 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. With all of this in mind let’s take a gander at the fresh hedge fund action regarding SVMK Inc. (NASDAQ:SVMK).

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

At the end of December, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SVMK over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Legion Partners Asset Management was the largest shareholder of SVMK Inc. (NASDAQ:SVMK), with a stake worth $39.4 million reported as of the end of December. Trailing Legion Partners Asset Management was Park West Asset Management, which amassed a stake valued at $35.8 million. Royce & Associates, D E Shaw, and ThornTree Capital Partners 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 Legion Partners Asset Management allocated the biggest weight to SVMK Inc. (NASDAQ:SVMK), around 10.26% of its 13F portfolio. Akaris Global Partners is also relatively very bullish on the stock, designating 7.64 percent of its 13F equity portfolio to SVMK.

Since SVMK Inc. (NASDAQ:SVMK) has experienced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few fund managers who were dropping their entire stakes by the end of the fourth quarter. At the top of the heap, Richard Driehaus’s Driehaus Capital cut the biggest position of the 750 funds watched by Insider Monkey, valued at an estimated $10.7 million in stock, and Mark N. Diker’s Diker Management was right behind this move, as the fund sold off about $3.7 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds by the end of the fourth quarter.

Let’s now take a look at hedge fund activity in other stocks similar to SVMK Inc. (NASDAQ:SVMK). We will take a look at Mimecast Limited (NASDAQ:MIME), WD-40 Company (NASDAQ:WDFC), W.R. Grace & Co. (NYSE:GRA), John Bean Technologies Corporation (NYSE:JBT), BMC Stock Holdings, Inc. (NASDAQ:BMCH), Celsius Holdings, Inc. (NASDAQ:CELH), and WNS (Holdings) Limited (NYSE:WNS). This group of stocks’ market caps match SVMK’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $417 million. That figure was $326 million in SVMK’s case. W.R. Grace & Co. (NYSE:GRA) is the most popular stock in this table. On the other hand John Bean Technologies Corporation (NYSE:JBT) is the least popular one with only 13 bullish hedge fund positions. SVMK Inc. (NASDAQ:SVMK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SVMK is 68.3. 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 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately SVMK wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on SVMK were disappointed as the stock returned -27% since the end of December (through 4/12) 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.

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