On Monday Veeva Systems Inc (NYSE:VEEV) was one of the top winners, gaining around 11%. The jump came on amid the announcement that GlaxoSmithKline plc (ADR) (NYSE:GSK) has selected the company for multichannel customer relationship management. Also on Monday, Veeva announced that it has hired software industry veteran Alan Mateo as executive vice president of global sales. So far, the stock is up by 5%. Investors seem to be optimistic about Veeva Systems Inc (NYSE:VEEV)’s future as the last round of 13F filings showed an increase in popularity of the company, with 23 funds holding in aggregate $263.62 million worth of stock, versus 15 funds a quarter earlier. One of the funds that would benefit the most from the company’s upside is Christopher Lord‘s Criterion Capital, which owns 6.34 million shares as of the end of 2014.
The company also provided solid financial results, which showed a 38.5% annual growth in sales to $87 million and adjusted EPS of $0.12, up by 71.4% on the year. Even though EPS came by $0.03 above the estimates, investors were disappointed that the company did not top the high-end of some estimates. Nevertheless, the recent deal with GlaxoSmithKline plc (ADR) (NYSE:GSK) is good news, because the global exposure of the pharmaceutical company would help Veeva Systems Inc (NYSE:VEEV) reach its sales target in the next couple of months. Moreover, the addition of Mr. Mateo will also enhance the company’s management team.
Even though Criterion Capital is the largest sharheolder of Veeva Systems Inc (NYSE:VEEV) among the funds that we track, the position represents only the seventh-largest holding in the fund’s equity portfolio. Criterion initiated a stake with 635,500 shares during the fourth quarter of 2013 and then upped the stake by 480% during the first quarter of last year. Another shareholder of Veeva is James Parsons’ Junto Capital Management, which initiated a stake with 488,400 shares during the October-December period.
Criterion Capital is a technology-focused fund that makes fundamentals-driven investments in high-quality businesses. At the end of 2014, Criterion held around $2.67 billlion in equities. The fund’s commitment to the technology sector can be observed even by taking a look at the fund’s top picks, the top three of which are represented by Palo Alto Networks Inc (NYSE:PANW), ServiceNow Inc (NYSE:NOW), and Workday Inc (NYSE:WDAY).
We keep track of the stocks in which hedge funds invest their money because we observed that tracking their activity can help retail investors to beat the market by around 1.0 percentage point per month. However, the idea does not involve investing in large-cap popular companies like Apple Inc. (NASDAQ:AAPL), Facebook Inc (NASDAQ:FB) or Alibaba Group Holding Ltd (NYSE:BABA). In fact, our tests of a portfolio consisting of 50 most popular stocks among hedge funds showed an underperformance of 7 basis points in comparison to the market. The key to our strategy is investing in small-cap picks. So far, this strategy returned 132% between mid-2012 and March, 2015, beating the market by around 79 percentage points.
Let’s take a further look at Criterion Capital’s top picks. The fund has reduced his largest stake, which is represented by Palo Alto Networks Inc (NYSE:PANW), by 43% during the fourth quarter. In this way, as of the end of 2014, Criterion holds around 1.74 million shares of Palo Alto Networks Inc (NYSE:PANW) valued at $213.52 million. The stock of the enterprise security platform surged by 83% in the last 52 weeks. Palo Alto has already delivered financial results that came above the esimates and as cyber-security threats are on the rise, the company will perform even better in the future. John Burbank’s Passport Capital is another shareholder of Palo Alto Networks Inc (NYSE:PANW), owning almost 500,000 shares as of the end of 2014.
In ServiceNow Inc (NYSE:NOW), Criterion also initiated a stake during the last quarter of 2013 and within the last year, it surged its position to 3.05 million shares, held as of the end of the fourth quarter, from 366,400 shares held initially. At the end of 2014, the fund’s stake in the provider of cloud-based solutions was valued at $207.18 million. Criterion is the largest shareholder of ServiceNow Inc (NYSE:NOW) among the funds that we track, followed by Christopher Lyle’s SCGE Management with 720,000 share. The stock, meanwhile, appreciated by 18% in the last 52 weeks, significantly outperforming the IT Services industry growth of 3%. ServiceNow Inc (NYSE:NOW) has been battling Hewlett-Packard Company (NYSE:HPQ) in court after the latter accused it of patent infringement. However, recently, a federal judge in California invalitated four of HP’s patents for being too abstract. The lawsuit will move on, however, as there are still four patents that have been left intact by the judge.
Finally there is Workday Inc (NYSE:WDAY), which represents Criterion’s third largest stake that is valued at $201.49 million. During the fourth quarter, the fund inched up its position by 4% to 2.47 million shares. Unlike the previous companies, Workday Inc (NYSE:WDAY)’s stock lost 17% in the last year, although the whole application software industry did not perform well, gaining only 0.60% during the same period. Workday provides enterprise cloud-based applications for human capital management and finance. On March 16, Brean Capital initiated coverage on Workday Inc (NYSE:WDAY) setting a ‘Hold’ rating with a price target of $86.00. Alan Fournier‘s Pennant Capital Management is also invested in Workday and owns 2.45 million shares as of the end of last year.
Disclosure: none
