Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is ServiceNow Inc (NYSE:NOW), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is ServiceNow Inc (NYSE:NOW) a buy here? The best stock pickers were becoming more confident. The number of bullish hedge fund bets advanced by 2 recently. ServiceNow Inc (NYSE:NOW) was in 98 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 96. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NOW ranked #23 among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Glen Kacher of Light Street Capital
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Do Hedge Funds Think NOW Is A Good Stock To Buy Now?
At the end of March, a total of 98 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NOW over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in ServiceNow Inc (NYSE:NOW) was held by Tiger Global Management LLC, which reported holding $1078.2 million worth of stock at the end of December. It was followed by Lone Pine Capital with a $739.5 million position. Other investors bullish on the company included Viking Global, SCGE Management, and Alkeon Capital Management. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to ServiceNow Inc (NYSE:NOW), around 10.43% of its 13F portfolio. Immersion Capital is also relatively very bullish on the stock, setting aside 7.38 percent of its 13F equity portfolio to NOW.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. Stockbridge Partners, managed by Sharlyn C. Heslam, assembled the most valuable position in ServiceNow Inc (NYSE:NOW). Stockbridge Partners had $106.2 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also initiated a $75 million position during the quarter. The other funds with brand new NOW positions are Renaissance Technologies, Glen Kacher’s Light Street Capital, and Robert Boucai’s Newbrook Capital Advisors.
Let’s now review hedge fund activity in other stocks similar to ServiceNow Inc (NYSE:NOW). These stocks are Diageo plc (NYSE:DEO), Booking Holdings Inc. (NASDAQ:BKNG), Advanced Micro Devices, Inc. (NASDAQ:AMD), Altria Group Inc (NYSE:MO), Zoom Video Communications, Inc. (NASDAQ:ZM), Stryker Corporation (NYSE:SYK), and GlaxoSmithKline plc (NYSE:GSK). All of these stocks’ market caps match NOW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DEO | 22 | 724467 | -1 |
| BKNG | 103 | 6810305 | -5 |
| AMD | 62 | 3703315 | -12 |
| MO | 38 | 1109493 | 1 |
| ZM | 54 | 5672277 | -5 |
| SYK | 46 | 3154010 | 2 |
| GSK | 25 | 1359731 | -5 |
| Average | 50 | 3219085 | -3.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 50 hedge funds with bullish positions and the average amount invested in these stocks was $3219 million. That figure was $6128 million in NOW’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand Diageo plc (NYSE:DEO) is the least popular one with only 22 bullish hedge fund positions. ServiceNow Inc (NYSE:NOW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NOW is 83.9. 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 25.8% in 2021 through August 6th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on NOW, though not to the same extent, as the stock returned 18.1% since Q1 (through August 6th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
