We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article, we look at what those funds think of Zendesk Inc (NYSE:ZEN) based on that data.
Zendesk Inc (NYSE:ZEN) investors should be aware of an increase in enthusiasm from smart money lately. Zendesk Inc (NYSE:ZEN) was in 52 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 63. Our calculations also showed that ZEN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining 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 let’s take a glance at the fresh hedge fund action encompassing Zendesk Inc (NYSE:ZEN).
Do Hedge Funds Think ZEN Is A Good Stock To Buy Now?
At the end of June, a total of 52 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the first quarter of 2020. On the other hand, there were a total of 63 hedge funds with a bullish position in ZEN a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, 0 held the most valuable stake in Zendesk Inc (NYSE:ZEN), which was worth $292.9 million at the end of the second quarter. On the second spot was Cadian Capital which amassed $217.1 million worth of shares. Polar Capital, Point72 Asset Management, and Echo Street 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 Cadian Capital allocated the biggest weight to Zendesk Inc (NYSE:ZEN), around 9.64% of its 13F portfolio. Toronado Partners is also relatively very bullish on the stock, dishing out 8.93 percent of its 13F equity portfolio to ZEN.
As aggregate interest increased, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in Zendesk Inc (NYSE:ZEN). Balyasny Asset Management had $87.2 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $52.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Louis Bacon’s Moore Global Investments, and Michel Massoud’s Melqart Asset Management.
Let’s also examine hedge fund activity in other stocks similar to Zendesk Inc (NYSE:ZEN). We will take a look at Bill.com Holdings, Inc. (NYSE:BILL), CMS Energy Corporation (NYSE:CMS), Hologic, Inc. (NASDAQ:HOLX), Monolithic Power Systems, Inc. (NASDAQ:MPWR), Celanese Corporation (NYSE:CE), Diamondback Energy Inc (NASDAQ:FANG), and United Airlines Holdings Inc (NYSE:UAL). This group of stocks’ market caps are closest to ZEN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BILL | 53 | 2766914 | 2 |
| CMS | 31 | 693813 | 3 |
| HOLX | 41 | 977376 | 9 |
| MPWR | 34 | 702043 | 2 |
| CE | 37 | 594932 | 1 |
| FANG | 38 | 443251 | 3 |
| UAL | 39 | 704030 | 1 |
| Average | 39 | 983194 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $983 million. That figure was $1852 million in ZEN’s case. Bill.com Holdings, Inc. (NYSE:BILL) is the most popular stock in this table. On the other hand CMS Energy Corporation (NYSE:CMS) is the least popular one with only 31 bullish hedge fund positions. Zendesk Inc (NYSE:ZEN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZEN is 82.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 through November 5th and beat the market again by 3.1 percentage points. Unfortunately ZEN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ZEN were disappointed as the stock returned -30% since the end of June (through 11/5) 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 many of these stocks already outperformed the market since 2019.
Follow Zendesk Inc. (NYSE:ZEN)
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Disclosure: None. This article was originally published at Insider Monkey.
