#$tdg

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How Hedge Fund Crowding Dragged Down Tableau Software

Tableau Software's earnings release was supposed to remind growth investors what they pay for. They shared reports of dramatic growth, year over year. Why then are they down more than 50% over the course of a week? On February 4, 2016, Tableau Software (DATA) announced impressive 4Q15 results. Tableau reported revenues of $202.8m and marked a rise of 42% year-over-year, compared to 4Q14. Analysts had expected the company to post earnings of $200.8 million with EPS of $0.16. Tableau Software comfortably beat these estimates. If The answer isn't in the fundamentals, it may be in the ownership structure. It turns out, knowing who the other owners are can tell you a lot about what happens when people rush for the exits. Tableau was among the less popular names in the hedge fund universe as of the last disclosure. Unlike what one would expect, just about seventy hedge fund filers owned Tableau. It's among the contrarian holdings in the overall hedge fund universe. Nonetheless, the overall hedge fund ownership as a percentage of the institutional float is 37%. Moreover, they were increasing their positions, quarter over quarter. The overall hedge fund ownership of Tableau's institutional float is so crowded, it exceeds that of Valiant Pharmaceuticals (VRX), of which 32% of the institutional float was claimed by hedge funds. The institutional float of Tableau is the dollar value of all stock held by institutional investors that file ownership disclosures. When cloud services companies blew up last week, Tableau's owners had a problem. The owners consisted of a minority of hedge fund investors that had come to represent an outsized percentage of the institutional float. While they had been accumulating shares of Tableau, others were selling into their contrarian position. When it came time to exit, they were the only buyers, and no one had an appetite to go shopping. What happened to Tableau? It tanked, down 50%. This wasn't so good for Matrix Capital or Tiger Global or Antipodean Advisors, which each have large, high conviction positions in Tableau. Tableau may be particularly sensitive to these ownership-driven risks. After last week, they now only have $2.9b in market capitalization. That said, similar effects seen in Transdigm (TDG), with $10b in market capitalization, and other, larger companies illustrate that ownership-driven risk clearly extends into larger capitalizaiton positions that are also found among the S&P500 (SPY). Use Symmetric to track hedge fund managers, their positions, crowded trades such as Tableau, and returns click here.

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How Hedge Fund Crowding Dragged Down Transdigm

Transdigm's (TDG) earnings release was hardly an embarrassment. They saw impressive growth, quarter over quarter. And it wasn't just in the top-line. Why then are they down more than 15% from last Friday? Quarterly net sales were up 20% to $701.7m, and net income had increased 20% to $114.9 million, yielding $1.97 per share. Adjustments for one-time items, boosted earnings $2.27 per share. It didn't have the makings of a disaster. If The answer isn't in the fundamentals, it may be in the ownership structure. It turns out, knowing who the other owners are can tell you a lot about what happens when people rush for the exits. Transdigm was among the less popular names in the hedge fund universe as of the last disclosure. Unlike what one would expect, just about seventy hedge fund filers owned Transdigm. It's among the less popular holdings in the overall hedge fund universe. Nonetheless, the overall hedge fund ownership as a percentage of the institutional float is 30%. Moreover, they were increasing their positions, quarter over quarter. The overall hedge fund ownership of Transdigm's institutional float is so crowded, it looks almost like Valiant Pharmaceuticals (VRX), of which 32% of the institutional float was claimed by hedge funds. The institutional float of Transdigm is the dollar value of all stock held by institutional investors that file ownership disclosures. When Transdigm didn't quite meet expectations on Tuesday, the owners had a problem. The owners represented a minority of hedge fund investors that had come to represent an outsized percentage of the institutional float. While they had been accumulating shares of Transdigm, others were selling into their contrarian position. When it came time to exit, no one was there to buy. Transdigm isn't a small cap stock. It has $10b in market capitalization, so the ownership consideration clearly extends into middle capitalization and larger positions that are also found among the S&P500 (SPY). Use Symmetric to surface managers with unique sources of alpha, flag those that may be in trouble, and track the stocks in which they're invested. For in-depth reports on hedge fund managers, their positions, crowding, and returns across holdings in the S&P 500 and the full universe of equity holdings click here.