Published on 4 Oct 2021 on Insider Monkey via Yahoo Finance

Hedge Funds Are Snapping Up HubSpot Inc (HUBS)

In this article we will take a look at whether hedge funds think HubSpot Inc (NYSE:HUBS) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

HubSpot Inc (NYSE:HUBS) shareholders have witnessed an increase in hedge fund interest recently. HubSpot Inc (NYSE:HUBS) was in 54 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 52. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 46 hedge funds in our database with HUBS holdings at the end of March. Our calculations also showed that HUBS isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.