The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Datadog, Inc. (NASDAQ:DDOG) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
Is Datadog, Inc. (NASDAQ:DDOG) a good stock to buy now? Money managers were buying. The number of bullish hedge fund bets improved by 6 lately. Datadog, Inc. (NASDAQ:DDOG) was in 62 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 57. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DDOG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 56 hedge funds in our database with DDOG holdings at the end of June.
Philippe Laffont of Coatue Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to check out the recent hedge fund action encompassing Datadog, Inc. (NASDAQ:DDOG).
Do Hedge Funds Think DDOG Is A Good Stock To Buy Now?
At Q3’s end, a total of 62 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 42 hedge funds with a bullish position in DDOG a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Tiger Global Management LLC was the largest shareholder of Datadog, Inc. (NASDAQ:DDOG), with a stake worth $740.7 million reported as of the end of September. Trailing Tiger Global Management LLC was Lone Pine Capital, which amassed a stake valued at $656.8 million. D1 Capital Partners, Whale Rock Capital Management, and Melvin Capital Management 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 Ashe Capital allocated the biggest weight to Datadog, Inc. (NASDAQ:DDOG), around 11.52% of its 13F portfolio. General Equity Partners is also relatively very bullish on the stock, earmarking 9.71 percent of its 13F equity portfolio to DDOG.
As industrywide interest jumped, specific money managers have jumped into Datadog, Inc. (NASDAQ:DDOG) headfirst. Renaissance Technologies, assembled the most valuable position in Datadog, Inc. (NASDAQ:DDOG). Renaissance Technologies had $161.2 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $153.8 million position during the quarter. The other funds with new positions in the stock are Gabriel Plotkin’s Melvin Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and James Crichton’s Hitchwood Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Datadog, Inc. (NASDAQ:DDOG) but similarly valued. We will take a look at Amphenol Corporation (NYSE:APH), Lloyds Banking Group PLC (NYSE:LYG), Barclays PLC (NYSE:BCS), Match Group, Inc. (NASDAQ:MTCH), Roblox Corporation (NYSE:RBLX), Ambev SA (NYSE:ABEV), and Southern Copper Corporation (NYSE:SCCO). This group of stocks’ market caps match DDOG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APH | 26 | 897948 | -13 |
| LYG | 8 | 16143 | 0 |
| BCS | 12 | 105770 | 1 |
| MTCH | 56 | 2662829 | -7 |
| RBLX | 50 | 3575923 | 1 |
| ABEV | 15 | 79897 | -3 |
| SCCO | 23 | 403491 | 0 |
| Average | 27.1 | 1106000 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $1106 million. That figure was $4935 million in DDOG’s case. Match Group, Inc. (NASDAQ:MTCH) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Datadog, Inc. (NASDAQ:DDOG) is more popular among hedge funds. Our overall hedge fund sentiment score for DDOG is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on DDOG as the stock returned 3.4% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
