In this article you are going to find out whether hedge funds think Twilio Inc. (NYSE:TWLO) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Twilio Inc. (NYSE:TWLO) was in 94 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 71. This means the bullish number of hedge fund positions in this stock reached another all time high. TWLO investors should pay attention to an increase in enthusiasm from smart money lately. There were 71 hedge funds in our database with TWLO holdings at the end of September. Our calculations also showed that TWLO ranked #29 among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. With all of this in mind let’s take a gander at the latest hedge fund action surrounding Twilio Inc. (NYSE:TWLO).
Do Hedge Funds Think TWLO Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 94 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32% from the previous quarter. On the other hand, there were a total of 60 hedge funds with a bullish position in TWLO a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, SCGE Management was the largest shareholder of Twilio Inc. (NYSE:TWLO), with a stake worth $942.1 million reported as of the end of December. Trailing SCGE Management was Alkeon Capital Management, which amassed a stake valued at $657.3 million. ARK Investment Management, Foxhaven Asset Management, and Thrive Capital 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 Thrive Capital allocated the biggest weight to Twilio Inc. (NYSE:TWLO), around 31.83% of its 13F portfolio. Jeneq Management is also relatively very bullish on the stock, dishing out 12.94 percent of its 13F equity portfolio to TWLO.
As one would reasonably expect, key money managers have jumped into Twilio Inc. (NYSE:TWLO) headfirst. Thrive Capital, managed by Joshua Kushner, created the most valuable position in Twilio Inc. (NYSE:TWLO). Thrive Capital had $295.1 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $65.2 million position during the quarter. The other funds with brand new TWLO positions are Louis Bacon’s Moore Global Investments, Robert Boucai’s Newbrook Capital Advisors, and Suraj Parkash Chopra’s Force Hill Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Twilio Inc. (NYSE:TWLO) but similarly valued. These stocks are Humana Inc (NYSE:HUM), Illumina, Inc. (NASDAQ:ILMN), Westpac Banking Corporation (NYSE:WBK), Banco Santander, S.A. (NYSE:SAN), DuPont de Nemours Inc (NYSE:DD), Regeneron Pharmaceuticals Inc (NASDAQ:REGN), and Dollar General Corp. (NYSE:DG). This group of stocks’ market values match TWLO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HUM | 59 | 3966420 | -2 |
| ILMN | 45 | 1747647 | 1 |
| WBK | 3 | 29715 | -1 |
| SAN | 14 | 415472 | 0 |
| DD | 60 | 6277336 | -1 |
| REGN | 46 | 1330342 | 2 |
| DG | 57 | 1677239 | 1 |
| Average | 40.6 | 2206310 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.6 hedge funds with bullish positions and the average amount invested in these stocks was $2206 million. That figure was $5011 million in TWLO’s case. DuPont de Nemours Inc (NYSE:DD) is the most popular stock in this table. On the other hand Westpac Banking Corporation (NYSE:WBK) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Twilio Inc. (NYSE:TWLO) is more popular among hedge funds. Our overall hedge fund sentiment score for TWLO 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately TWLO wasn’t nearly as successful as these 30 stocks and hedge funds that were betting on TWLO were disappointed as the stock returned 8.6% since the end of the fourth quarter (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the more diversified list of the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
