We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on MongoDB, Inc. (NASDAQ:MDB).
MongoDB, Inc. (NASDAQ:MDB) investors should pay attention to an increase in hedge fund interest lately. MDB was in 32 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 31 hedge funds in our database with MDB positions at the end of the previous quarter. Our calculations also showed that MDB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Steven Cohen of Point72 Asset Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a peek at the new hedge fund action surrounding MongoDB, Inc. (NASDAQ:MDB).
How are hedge funds trading MongoDB, Inc. (NASDAQ:MDB)?
At the end of the fourth quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MDB over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Tiger Global Management LLC was the largest shareholder of MongoDB, Inc. (NASDAQ:MDB), with a stake worth $251.5 million reported as of the end of September. Trailing Tiger Global Management LLC was Whale Rock Capital Management, which amassed a stake valued at $155.5 million. SQN Investors, Point72 Asset Management, and Citadel Investment Group 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 Cota Capital allocated the biggest weight to MongoDB, Inc. (NASDAQ:MDB), around 10.13% of its 13F portfolio. SQN Investors is also relatively very bullish on the stock, designating 9.6 percent of its 13F equity portfolio to MDB.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, initiated the most valuable position in MongoDB, Inc. (NASDAQ:MDB). Point72 Asset Management had $56.9 million invested in the company at the end of the quarter. Bobby Yazdani and Babak Poushanchi’s Cota Capital also initiated a $18.3 million position during the quarter. The other funds with new positions in the stock are Brandon Haley’s Holocene Advisors, Bernard Selz’s Selz Capital, and Israel Englander’s Millennium Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as MongoDB, Inc. (NASDAQ:MDB) but similarly valued. These stocks are Charles River Laboratories International Inc. (NYSE:CRL), LPL Financial Holdings Inc (NASDAQ:LPLA), Tapestry, Inc. (NYSE:TPR), and Dropbox, Inc. (NASDAQ:DBX). This group of stocks’ market valuations are similar to MDB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRL | 32 | 1088526 | -1 |
| LPLA | 41 | 1380551 | 4 |
| TPR | 40 | 543774 | 14 |
| DBX | 46 | 839623 | 4 |
| Average | 39.75 | 963119 | 5.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.75 hedge funds with bullish positions and the average amount invested in these stocks was $963 million. That figure was $779 million in MDB’s case. Dropbox, Inc. (NASDAQ:DBX) is the most popular stock in this table. On the other hand Charles River Laboratories International Inc. (NYSE:CRL) is the least popular one with only 32 bullish hedge fund positions. Compared to these stocks MongoDB, Inc. (NASDAQ:MDB) is even less popular than CRL. 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 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but managed to beat the market by 3.2 percentage points. A small number of hedge funds were also right about betting on MDB, though not to the same extent, as the stock returned -24.8% during the same time period and outperformed the market as well.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
