Is ServiceNow Inc (NOW) Going to Burn These Hedge Funds?
Is ServiceNow Inc (NYSE:NOW) a good investment?
To the average investor, there are a multitude of metrics investors can use to watch their holdings. Some of the most under-the-radar are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top investment managers can trounce the market by a very impressive amount (see just how much).
Equally as key, bullish insider trading activity is another way to analyze the marketplace. As the old adage goes: there are many motivations for an executive to sell shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this strategy if "monkeys" understand what to do (learn more here).
Thus, it's important to examine the latest info for ServiceNow Inc (NYSE:NOW).
Hedge fund activity in ServiceNow Inc (NYSE:NOW)
Heading into Q3, a total of 22 of the hedge funds we track were bullish in this stock, a change of 22% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly.
Out of the hedge funds we follow, Criterion Capital, managed by Christopher Lord, holds the biggest position in ServiceNow Inc (NYSE:NOW). Criterion Capital has a $154.9 million position in the stock, comprising 6.3% of its 13F portfolio. Coming in second is Conatus Capital Management, managed by David Stemerman, which held a $75.4 million position; 3.2% of its 13F portfolio is allocated to the stock. Other hedgies with similar optimism include Noam Gottesman's GLG Partners, Donald Chiboucis's Columbus Circle Investors and Panayotis Sparaggis's Alkeon Capital Management.
As one would understandably expect, certain bigger names have been driving this bullishness. Criterion Capital, managed by Christopher Lord, created the most valuable position in ServiceNow Inc (NYSE:NOW). Criterion Capital had 154.9 million invested in the company at the end of the quarter. David Stemerman's Conatus Capital Management also made a $75.4 million investment in the stock during the quarter. The following funds were also among the new NOW investors: Noam Gottesman's GLG Partners, Donald Chiboucis's Columbus Circle Investors, and Panayotis Sparaggis's Alkeon Capital Management.
What have insiders been doing with ServiceNow Inc (NYSE:NOW)?
Insider buying made by high-level executives is most useful when the company in question has seen transactions within the past six months. Over the latest six-month time frame, ServiceNow Inc (NYSE:NOW) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll also take a look at the relationship between both of these indicators in other stocks similar to ServiceNow Inc (NYSE:NOW). These stocks are Syntel, Inc. (NASDAQ:SYNT), Computer Sciences Corporation (NYSE:CSC), Rackspace Hosting, Inc. (NYSE:RAX), Gartner Inc (NYSE:IT), and NCR Corporation (NYSE:NCR). This group of stocks are the members of the information technology services industry and their market caps are closest to NOW's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Syntel, Inc. (NASDAQ:SYNT)
Computer Sciences Corporation (NYSE:CSC)
Rackspace Hosting, Inc. (NYSE:RAX)
Gartner Inc (NYSE:IT)
NCR Corporation (NYSE:NCR)
Using the results explained by our tactics, regular investors should always keep one eye on hedge fund and insider trading activity, and ServiceNow Inc (NYSE:NOW) is an important part of this process.