Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Snowflake Inc (NYSE:SNOW) in this article.
Is Snowflake Inc (NYSE:SNOW) ready to rally soon? Prominent investors were becoming hopeful. The number of long hedge fund positions increased by 17 lately. Snowflake Inc (NYSE:SNOW) was in 71 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 59. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SNOW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Philippe Laffont of Coatue Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a gander at the fresh hedge fund action surrounding Snowflake Inc (NYSE:SNOW).
Do Hedge Funds Think SNOW Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 71 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 31% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SNOW over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Altimeter Capital Management held the most valuable stake in Snowflake Inc (NYSE:SNOW), which was worth $7387.6 million at the end of the fourth quarter. On the second spot was Berkshire Hathaway which amassed $1404.4 million worth of shares. Coatue Management, Tiger Global Management LLC, and D1 Capital Partners 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 Altimeter Capital Management allocated the biggest weight to Snowflake Inc (NYSE:SNOW), around 52.83% of its 13F portfolio. Adams Street Partners is also relatively very bullish on the stock, setting aside 7.06 percent of its 13F equity portfolio to SNOW.
As one would reasonably expect, specific money managers have jumped into Snowflake Inc (NYSE:SNOW) headfirst. Melvin Capital Management, managed by Gabriel Plotkin, established the most valuable position in Snowflake Inc (NYSE:SNOW). Melvin Capital Management had $349.7 million invested in the company at the end of the quarter. Jonathan Soros’s JS Capital also initiated a $71.5 million position during the quarter. The following funds were also among the new SNOW investors: Leon Shaulov’s Maplelane Capital, Joseph Samuels’s Islet Management, and David Fiszel’s Honeycomb Asset Management.
Let’s also examine hedge fund activity in other stocks similar to Snowflake Inc (NYSE:SNOW). These stocks are HCA Healthcare Inc (NYSE:HCA), Equinor ASA (NYSE:EQNR), VMware, Inc. (NYSE:VMW), Intercontinental Exchange Inc (NYSE:ICE), Air Products & Chemicals, Inc. (NYSE:APD), Marsh & McLennan Companies, Inc. (NYSE:MMC), and ABB Ltd (NYSE:ABB). This group of stocks’ market valuations resemble SNOW’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HCA | 62 | 3245183 | -11 |
| EQNR | 8 | 99733 | -10 |
| VMW | 25 | 549319 | -10 |
| ICE | 58 | 3328612 | 5 |
| APD | 32 | 586835 | -18 |
| MMC | 37 | 2143915 | -6 |
| ABB | 11 | 563747 | 3 |
| Average | 33.3 | 1502478 | -6.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $1502 million. That figure was $12965 million in SNOW’s case. HCA Healthcare Inc (NYSE:HCA) is the most popular stock in this table. On the other hand Equinor ASA (NYSE:EQNR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Snowflake Inc (NYSE:SNOW) is more popular among hedge funds. Our overall hedge fund sentiment score for SNOW 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 returned 25.8% in 2021 through August 6th but still managed to beat the market by 6.7 percentage points. Hedge funds were also right about betting on SNOW as the stock returned 21% since the end of March (through 8/6) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
