Hedge Funds Are Coming Back To Cloudflare, Inc. (NET)

… Inc. (NASDAQ:ABMD), Pool Corporation (NASDAQ:POOL), KB Financial Group, Inc. (NYSE:KB), Alteryx, Inc. (NYSE:AYX), Gartner Inc (NYSE:IT), …

As aggregate interest increased, specific money managers were leading the bulls’ herd. Engle Capital, managed by Jeffrey Hoffner, created the most outsized position in Cloudflare, Inc. (NYSE:NET). Engle Capital had $19.8 million invested in the company at the end of the quarter. Joel Ramin’s 12 West Capital Management also initiated a $12.7 million position during the quarter. The following funds were also among the new NET investors: Anand Parekh’s Alyeska Investment Group, Dmitry Balyasny’s Balyasny Asset Management, and Noam Gottesman’s GLG Partners.

Let’s go over hedge fund activity in other stocks similar to Cloudflare, Inc. (NYSE:NET). These stocks are Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), ABIOMED, Inc. (NASDAQ:ABMD), Pool Corporation (NASDAQ:POOL), KB Financial Group, Inc. (NYSE:KB), Alteryx, Inc. (NYSE:AYX), Gartner Inc (NYSE:IT), and Trimble Inc. (NASDAQ:TRMB). This group of stocks’ market caps are similar to NET’s market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HZNP,45,2955360,4 ABMD,31,823991,4 POOL,35,492145,2 KB,6,36329,-1 AYX,48,1612975,5 IT,32,1302132,0 TRMB,26,979865,6 Average,31.9,1171828,2.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.9 hedge funds with bullish positions and the average amount invested in these stocks was $1172 million. That figure was $456 million in NET’s case. Alteryx, Inc. (NYSE:AYX) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (NYSE:KB) is the least popular one with only 6 bullish hedge fund positions. Cloudflare, Inc. (NYSE:NET) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NET is 75.7. 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately NET wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on NET were disappointed as the stock returned 6.4% during the same time period 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.

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

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