Were Expert Investors Right About MongoDB, Inc. (MDB)?

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding MongoDB, Inc. (NASDAQ:MDB) and determine whether hedge funds had an edge regarding this stock.

Is MongoDB, Inc. (NASDAQ:MDB) worth your attention right now? The smart money was becoming more confident. The number of long hedge fund positions inched up by 3 recently. MongoDB, Inc. (NASDAQ:MDB) was in 47 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 46. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MDB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. Now let’s review the key hedge fund action regarding MongoDB, Inc. (NASDAQ:MDB).

Alex Sacerdote of Whale Rock Capital Management

Do Hedge Funds Think MDB Is A Good Stock To Buy Now?

At third quarter’s end, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MDB over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Whale Rock Capital Management held the most valuable stake in MongoDB, Inc. (NASDAQ:MDB), which was worth $596.5 million at the end of the third quarter. On the second spot was Tybourne Capital Management which amassed $275.6 million worth of shares. Arrowstreet Capital, Citadel Investment Group, and SQN Investors 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 SQN Investors allocated the biggest weight to MongoDB, Inc. (NASDAQ:MDB), around 10.72% of its 13F portfolio. Andar Capital is also relatively very bullish on the stock, dishing out 8.65 percent of its 13F equity portfolio to MDB.

Consequently, specific money managers have jumped into MongoDB, Inc. (NASDAQ:MDB) headfirst. Millennium Management, managed by Israel Englander, assembled the most valuable position in MongoDB, Inc. (NASDAQ:MDB). Millennium Management had $28.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $23.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Louis Bacon’s Moore Global Investments, Wen Han Li’s Andar Capital, and Rob Citrone’s Discovery Capital Management.

Let’s also examine hedge fund activity in other stocks similar to MongoDB, Inc. (NASDAQ:MDB). We will take a look at Corning Incorporated (NYSE:GLW), Fomento Económico Mexicano, S.A.B. de C.V. (NYSE:FMX), Ferguson plc (NYSE:FERG), State Street Corporation (NYSE:STT), AvalonBay Communities Inc (NYSE:AVB), Corteva, Inc. (NYSE:CTVA), and Seagen Inc. (NASDAQ:SGEN). All of these stocks’ market caps are closest to MDB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.6 hedge funds with bullish positions and the average amount invested in these stocks was $2868 million. That figure was $2172 million in MDB’s case. State Street Corporation (NYSE:STT) is the most popular stock in this table. On the other hand Ferguson plc (NYSE:FERG) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks MongoDB, Inc. (NASDAQ:MDB) is more popular among hedge funds. Our overall hedge fund sentiment score for MDB is 88. 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 beat the market by 3.6 percentage points. Unfortunately, MDB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MDB were disappointed as the stock returned -14.1% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.