Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Anaplan, Inc. (NYSE:PLAN)? The smart money sentiment can provide an answer to this question.
Is Anaplan, Inc. (NYSE:PLAN) a splendid investment now? The best stock pickers are turning bullish. The number of bullish hedge fund bets went up by 1 in recent months. Our calculations also showed that PLAN isn't among the 30 most popular stocks among hedge funds.
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. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to analyze the key hedge fund action regarding Anaplan, Inc. (NYSE:PLAN).
What does the smart money think about Anaplan, Inc. (NYSE:PLAN)?
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the fourth quarter of 2018. On the other hand, there were a total of 0 hedge funds with a bullish position in PLAN a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Philippe Laffont's Coatue Management has the number one position in Anaplan, Inc. (NYSE:PLAN), worth close to $356.5 million, accounting for 3.9% of its total 13F portfolio. The second largest stake is held by Bain Capital of Brookside Capital, with a $61 million position; the fund has 5.8% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions include Ken Griffin's Citadel Investment Group, Panayotis Takis Sparaggis's Alkeon Capital Management and Mick Hellman's HMI Capital.
As one would reasonably expect, key hedge funds were breaking ground themselves. Hitchwood Capital Management, managed by James Crichton, assembled the most valuable position in Anaplan, Inc. (NYSE:PLAN). Hitchwood Capital Management had $15.7 million invested in the company at the end of the quarter. Ben Gambill's Tiger Eye Capital also made a $6.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Brian Ashford-Russell and Tim Woolley's Polar Capital, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and D. E. Shaw's D E Shaw.
Let's check out hedge fund activity in other stocks similar to Anaplan, Inc. (NYSE:PLAN). These stocks are JetBlue Airways Corporation (NASDAQ:JBLU), Janus Henderson Group plc (NYSE:JHG), ICU Medical, Inc. (NASDAQ:ICUI), and Wyndham Hotels & Resorts, Inc. (NYSE:WH). This group of stocks' market caps are similar to PLAN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JBLU,26,498119,-5 JHG,12,145597,-3 ICUI,15,329228,-5 WH,40,790556,3 Average,23.25,440875,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $441 million. That figure was $625 million in PLAN's case. Wyndham Hotels & Resorts, Inc. (NYSE:WH) is the most popular stock in this table. On the other hand Janus Henderson Group plc (NYSE:JHG) is the least popular one with only 12 bullish hedge fund positions. Anaplan, Inc. (NYSE:PLAN) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on PLAN as the stock returned 7.4% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.