Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards HubSpot Inc (NYSE:HUBS) to find out whether it was one of their high conviction long-term ideas.
Is HubSpot ready to rally soon? Hedge funds are betting on the stock. The number of long hedge fund positions inched up by 3 recently. HUBS was in 10 hedge funds’ portfolios at the end of the third quarter of 2015. There were 7 hedge funds in our database with HUBS 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 Trustmark Corp (NASDAQ:TRMK), WPX Energy Inc (NYSE:WPX), and OmniVision Technologies, Inc. (NASDAQ:OVTI) to gather more data points.
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According to most market participants, hedge funds are seen as unimportant, outdated investment vehicles of years past. While there are more than 8000 funds with their doors open at present, We choose to focus on the bigwigs of this club, around 700 funds. Most estimates calculate that this group of people watch over bulk of the hedge fund industry’s total asset base, and by keeping track of their unrivaled investments, Insider Monkey has found various investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Keeping this in mind, we’re going to take a peek at the latest action encompassing HubSpot Inc (NYSE:HUBS).
What does the smart money think about HubSpot Inc (NYSE:HUBS)?
Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from the second quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Light Street Capital, managed by Glen Kacher, holds the biggest position in HubSpot Inc (NYSE:HUBS). Light Street Capital has a $18.5 million position in the stock, comprising 2.8% of its 13F portfolio. Sitting at the No. 2 spot is Brad Gerstner of Altimeter Capital Management, with a $13.8 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish consist of Ken Griffin’s Citadel Investment Group and Jim Simons’ Renaissance Technologies and Drew Cupps’s Cupps Capital Management.
As one would reasonably expect, some big names were leading the bulls’ herd. Light Street Capital created the most valuable position in HubSpot Inc (NYSE:HUBS). Drew Cupps’s Cupps Capital Management also initiated a $3.2 million position during the quarter. The other funds with brand new HUBS positions are Jane Mendillo’s Harvard Management Co and David Costen Haley’s HBK Investments.
Let’s now take a look at hedge fund activity in other stocks similar to HubSpot Inc (NYSE:HUBS). We will take a look at Trustmark Corp (NASDAQ:TRMK), WPX Energy Inc (NYSE:WPX), OmniVision Technologies, Inc. (NASDAQ:OVTI), and Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY). All of these stocks’ market caps are closest to HUBS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRMK | 8 | 13831 | -1 |
| WPX | 37 | 529717 | 11 |
| OVTI | 23 | 226683 | 0 |
| PLAY | 23 | 165264 | -3 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $234 million. That figure was just $53 million in HUBS’s case. WPX Energy Inc (NYSE:WPX) is the most popular stock in this table. On the other hand Trustmark Corp (NASDAQ:TRMK) is the least popular one with only 8 bullish hedge fund positions. HubSpot Inc (NYSE:HUBS) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WPX might be a better candidate to consider for a closer analysis.
