At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Tufin Software Technologies Ltd. (NYSE:TUFN) makes for a good investment right now.
Is TUFN a good stock to buy? Tufin Software Technologies Ltd. (NYSE:TUFN) investors should be aware of a decrease in activity from the world's largest hedge funds of late. Tufin Software Technologies Ltd. (NYSE:TUFN) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 9. There were 9 hedge funds in our database with TUFN positions at the end of the fourth quarter. Our calculations also showed that TUFN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
According to most shareholders, hedge funds are assumed to be slow, old investment tools of yesteryear. While there are greater than 8000 funds trading at the moment, We choose to focus on the leaders of this club, about 850 funds. It is estimated that this group of investors have their hands on the majority of the hedge fund industry's total asset base, and by monitoring their matchless investments, Insider Monkey has uncovered several investment strategies that have historically outrun the market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Michael Gelband of ExodusPoint Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Keeping this in mind we're going to review the recent hedge fund action encompassing Tufin Software Technologies Ltd. (NYSE:TUFN).
Do Hedge Funds Think TUFN Is A Good Stock To Buy Now?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in TUFN a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Harvey Partners, managed by Jeffrey Moskowitz, holds the largest position in Tufin Software Technologies Ltd. (NYSE:TUFN). Harvey Partners has a $5.1 million position in the stock, comprising 3.5% of its 13F portfolio. The second largest stake is held by MAK Capital One, led by Michael Kaufman, holding a $4.2 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other peers that hold long positions consist of Israel Englander's Millennium Management, Michael Gelband's ExodusPoint Capital and Greg Eisner's Engineers Gate Manager. In terms of the portfolio weights assigned to each position Harvey Partners allocated the biggest weight to Tufin Software Technologies Ltd. (NYSE:TUFN), around 3.5% of its 13F portfolio. MAK Capital One is also relatively very bullish on the stock, dishing out 0.99 percent of its 13F equity portfolio to TUFN.
Seeing as Tufin Software Technologies Ltd. (NYSE:TUFN) has experienced falling interest from the smart money, we can see that there lies a certain "tier" of hedge funds that slashed their positions entirely by the end of the first quarter. It's worth mentioning that Christopher Hillary's Roubaix Capital dumped the largest investment of the "upper crust" of funds watched by Insider Monkey, worth about $2 million in stock. D. E. Shaw's fund, D E Shaw, also cut its stock, about $0.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds by the end of the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Tufin Software Technologies Ltd. (NYSE:TUFN) but similarly valued. These stocks are Regional Management Corp (NYSE:RM), Landos Biopharma, Inc. (NASDAQ:LABP), Haynes International, Inc. (NASDAQ:HAYN), Cytosorbents Corp (NASDAQ:CTSO), Acutus Medical, Inc. (NASDAQ:AFIB), Soliton, Inc. (NASDAQ:SOLY), and UFP Technologies, Inc. (NASDAQ:UFPT). This group of stocks' market values are similar to TUFN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RM,10,72384,-2 LABP,11,182497,11 HAYN,11,56951,-2 CTSO,8,40392,-2 AFIB,11,171165,-1 SOLY,4,20521,2 UFPT,8,39059,-3 Average,9,83281,0.4 [/table]
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $11 million in TUFN's case. Landos Biopharma, Inc. (NASDAQ:LABP) is the most popular stock in this table. On the other hand Soliton, Inc. (NASDAQ:SOLY) is the least popular one with only 4 bullish hedge fund positions. Tufin Software Technologies Ltd. (NYSE:TUFN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TUFN is 36.3. 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 negative signal and 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately TUFN wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TUFN investors were disappointed as the stock returned -9% since the end of March (through 6/25) 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 most of these stocks already outperformed the market in 2021.
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