Were These Hedge Funds Wrong About Loading Up On SVMK Inc. (SVMK)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards SVMK Inc. (NASDAQ:SVMK).

SVMK Inc. (NASDAQ:SVMK) was in 33 hedge funds’ portfolios at the end of June. The all time high for this statistics is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. SVMK shareholders have witnessed an increase in hedge fund interest of late. There were 29 hedge funds in our database with SVMK holdings at the end of March. Our calculations also showed that SVMK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are numerous signals stock market investors employ to analyze their holdings. A pair of the best signals are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top money managers can beat the market by a superb margin (see the details here).

Christopher Kiper of Legion Partners Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Last week, most investors overlooked a major development because of the presidential elections: Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 biggest insurance companies to identify fast growing companies in various industries. 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 to get excerpts of these letters in your inbox. Now let’s take a glance at the new hedge fund action surrounding SVMK Inc. (NASDAQ:SVMK).

How have hedgies been trading SVMK Inc. (NASDAQ:SVMK)?

Heading into the third quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in SVMK a year ago. 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, Park West Asset Management held the most valuable stake in SVMK Inc. (NASDAQ:SVMK), which was worth $45.1 million at the end of the third quarter. On the second spot was Legion Partners Asset Management which amassed $36.3 million worth of shares. ThornTree Capital Partners, Royce & Associates, and D E Shaw 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 Legion Partners Asset Management allocated the biggest weight to SVMK Inc. (NASDAQ:SVMK), around 10.17% of its 13F portfolio. Akaris Global Partners is also relatively very bullish on the stock, setting aside 8.97 percent of its 13F equity portfolio to SVMK.

As aggregate interest increased, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in SVMK Inc. (NASDAQ:SVMK). Arrowstreet Capital had $19.7 million invested in the company at the end of the quarter. Zachary Miller’s Parian Global Management also made a $10.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Warren Lammert’s Granite Point Capital, Ken Fisher’s Fisher Asset Management, and Joel Greenblatt’s Gotham Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SVMK Inc. (NASDAQ:SVMK) but similarly valued. These stocks are Stifel Financial Corp. (NYSE:SF), Ormat Technologies, Inc. (NYSE:ORA), Kirby Corporation (NYSE:KEX), The Hain Celestial Group, Inc. (NASDAQ:HAIN), KBR, Inc. (NYSE:KBR), BRF SA (NYSE:BRFS), and Box, Inc. (NYSE:BOX). All of these stocks’ market caps resemble SVMK’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $407 million. That figure was $310 million in SVMK’s case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand BRF SA (NYSE:BRFS) is the least popular one with only 16 bullish hedge fund positions. SVMK Inc. (NASDAQ:SVMK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SVMK is 83.7. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and beat the market again by 20.1 percentage points. Unfortunately SVMK wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SVMK were disappointed as the stock returned -11.1% since the end of June (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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