Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Cyberark Software Ltd (NASDAQ:CYBR) a buy right now? Hedge funds are getting less bullish. The number of bullish hedge fund bets shrunk by 2 lately. CYBR was in 21 hedge funds’ portfolios at the end of September. There were 23 hedge funds in our database with CYBR positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as NOW Inc (NYSE:DNOW), Education Realty Trust, Inc. (NYSE:EDR), and Cyberonics, Inc. (NASDAQ:CYBX) to gather more data points.
According to most market participants, hedge funds are seen as worthless, outdated financial vehicles of years past. While there are greater than 8000 funds in operation at present, Our researchers choose to focus on the bigwigs of this group, approximately 700 funds. These investment experts preside over the lion’s share of the hedge fund industry’s total asset base, and by monitoring their matchless stock picks, Insider Monkey has brought to light various investment strategies that have historically outperformed the broader indices. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, we’re going to take a glance at the recent action regarding Cyberark Software Ltd (NASDAQ:CYBR).
How have hedgies been trading Cyberark Software Ltd (NASDAQ:CYBR)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Balyasny Asset Management, managed by Dmitry Balyasny, holds the biggest position in Cyberark Software Ltd (NASDAQ:CYBR). Balyasny Asset Management has an $40.8 million position in the stock, comprising 0.3% of its 13F portfolio. On Balyasny Asset Management’s heels is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds an $27.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism comprise Drew Cupps’ Cupps Capital Management, Anand Parekh’s Alyeska Investment Group and Jacob Gottlieb’s Visium Asset Management.
Judging by the fact that Cyberark Software Ltd (NASDAQ:CYBR) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers that decided to sell off their positions entirely last quarter. At the top of the heap, Daniel Benton’s Andor Capital Management said goodbye to the biggest position of the 700 funds tracked by Insider Monkey, worth close to $15.7 million in stock, and Jim Simons’ Renaissance Technologies was right behind this move, as the fund sold off about $13.9 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Cyberark Software Ltd (NASDAQ:CYBR). We will take a look at NOW Inc (NYSE:DNOW), Education Realty Trust, Inc. (NYSE:EDR), Cyberonics, Inc. (NASDAQ:CYBX), and Argo Group International Holdings, Ltd. (NASDAQ:AGII). All of these stocks’ market caps resemble CYBR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DNOW | 15 | 431160 | 0 |
| EDR | 8 | 60813 | -3 |
| CYBX | 22 | 434410 | -2 |
| AGII | 20 | 114991 | 3 |
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 $260 million. That figure was $152 million in CYBR’s case. Cyberonics, Inc. (NASDAQ:CYBX) is the most popular stock in this table, while Education Realty Trust, Inc. (NYSE:EDR) is the least popular one with only 8 bullish hedge fund positions. Cyberark Software Ltd (NASDAQ:CYBR) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CYBX might be a better candidate to consider a long position.