Splunk Inc (NASDAQ:SPLK) shares have retreated by more than 2.5% in morning trading after the company reported a first quarter loss of $0.02 per share on revenue of $186 million, meeting loss estimates and beating top-line expectations by $11.88 million. Revenue rose by 48% year-over-year, led by the company’s Maintenance and Services segment, which saw sales jump by 57.9% year-over-year. License revenue rose by 40.5% and free cash flow was $32 million. For the full year, management anticipates revenue of $892 million-to-$896 million, up from the previous forecast of around $880 million.
We can judge whether Splunk Inc (NASDAQ:SPLK) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.
Is Splunk Inc (NASDAQ:SPLK) a buy right now? The smart money is betting on the stock. The number of bullish hedge fund bets improved by 7 recently. At Q1’s end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a 29% rise from the close of the fourth quarter of 2015. At the end of this article we will also compare SPLK to other stocks including Helmerich & Payne, Inc. (NYSE:HP), Harman International Industries Inc./DE/ (NYSE:HAR), and IDEX Corporation (NYSE:IEX) to get a better sense of its popularity.
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According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Christopher Lord’s Criterion Capital has the biggest position in Splunk Inc (NASDAQ:SPLK), worth close to $183.3 million, corresponding to 7.5% of its total 13F portfolio. Sitting at the No. 2 spot is Coatue Management, led by Philippe Laffont, holding a $108.2 million position; 1.4% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism contain Brian Taylor’s Pine River Capital Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital, and Dmitry Balyasny’s Balyasny Asset Management.
On the next page we’ll look at some funds that took up positions in Splunk during Q1, as well as compare the stock to a handful of others with similar market caps.
As aggregate interest increased in Q1, key hedge funds were driving this bullishness. Coatue Management created the biggest position in Splunk Inc (NASDAQ:SPLK), having $108.2 million invested in the company at the end of the quarter. Karthik Sarma’s SRS Investment Management also made a $25.2 million investment in the stock during the quarter. The other funds with brand new SPLK positions are Glenn Russell Dubin’s Highbridge Capital Management, Jim Simons’ Renaissance Technologies, and Christopher Zepf and Brian Thonn’s Kingdom Ridge Capital.
Let’s also examine hedge fund activity in other stocks similar to Splunk Inc (NASDAQ:SPLK). These stocks are Helmerich & Payne, Inc. (NYSE:HP), Harman International Industries Inc./DE/ (NYSE:HAR), IDEX Corporation (NYSE:IEX), and RPM International Inc. (NYSE:RPM). This group of stocks’ market valuations are closest to SPLK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HP | 26 | 282997 | 0 |
| HAR | 23 | 459552 | -4 |
| IEX | 14 | 234093 | -1 |
| RPM | 22 | 103348 | 1 |
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $270 million. That figure was $572 million in SPLK’s case. Helmerich & Payne, Inc. (NYSE:HP) is the most popular stock in this table. On the other hand IDEX Corporation (NYSE:IEX) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Splunk Inc (NASDAQ:SPLK) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and sentiment rose dramatically during Q1, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
