While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding nCino, Inc. (NASDAQ:NCNO).
Is NCNO stock a buy? nCino, Inc. (NASDAQ:NCNO) has experienced an increase in support from the world's most elite money managers recently. nCino, Inc. (NASDAQ:NCNO) was in 28 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 26 hedge funds in our database with NCNO holdings at the end of September. Our calculations also showed that NCNO isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of formulas stock market investors put to use to size up publicly traded companies. A couple of the most innovative formulas are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outclass the S&P 500 by a very impressive margin (see the details here).
Chase Coleman of Tiger Global
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now 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. Now we're going to take a glance at the latest hedge fund action encompassing nCino, Inc. (NASDAQ:NCNO).
Do Hedge Funds Think NCNO Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NCNO over the last 22 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Tybourne Capital Management, managed by Eashwar Krishnan, holds the number one position in nCino, Inc. (NASDAQ:NCNO). Tybourne Capital Management has a $72.5 million position in the stock, comprising 1.5% of its 13F portfolio. Coming in second is Tiger Global Management LLC, managed by Chase Coleman, which holds a $19.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish consist of Christopher Lyle's SCGE Management, Ken Griffin's Citadel Investment Group and Steve Cohen's Point72 Asset Management. In terms of the portfolio weights assigned to each position 3G Capital allocated the biggest weight to nCino, Inc. (NASDAQ:NCNO), around 1.52% of its 13F portfolio. Tybourne Capital Management is also relatively very bullish on the stock, earmarking 1.51 percent of its 13F equity portfolio to NCNO.
Consequently, specific money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, assembled the largest position in nCino, Inc. (NASDAQ:NCNO). Point72 Asset Management had $10 million invested in the company at the end of the quarter. Joseph Samuels's Islet Management also made a $9.1 million investment in the stock during the quarter. The other funds with brand new NCNO positions are Peter Muller's PDT Partners, Michel Massoud's Melqart Asset Management, and John Overdeck and David Siegel's Two Sigma Advisors.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as nCino, Inc. (NASDAQ:NCNO) but similarly valued. We will take a look at Manhattan Associates, Inc. (NASDAQ:MANH), PVH Corp (NYSE:PVH), Post Holdings Inc (NYSE:POST), ITT Inc. (NYSE:ITT), Futu Holdings Limited (NASDAQ:FUTU), Kilroy Realty Corp (NYSE:KRC), and Casey's General Stores, Inc. (NASDAQ:CASY). This group of stocks' market caps resemble NCNO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MANH,23,288212,1 PVH,37,1132304,9 POST,27,1536661,-3 ITT,28,406807,-2 FUTU,17,334170,2 KRC,25,251572,6 CASY,23,120810,2 Average,25.7,581505,2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.7 hedge funds with bullish positions and the average amount invested in these stocks was $582 million. That figure was $177 million in NCNO's case. PVH Corp (NYSE:PVH) is the most popular stock in this table. On the other hand Futu Holdings Limited (NASDAQ:FUTU) is the least popular one with only 17 bullish hedge fund positions. nCino, Inc. (NASDAQ:NCNO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NCNO is 64.5. 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 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 beat the market again by 0.9 percentage points. Unfortunately NCNO wasn't nearly as popular as these 30 stocks and hedge funds that were betting on NCNO were disappointed as the stock returned -7.2% since the end of December (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 top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.