HMI Capital increased its SailPoint stake by 162%. SAIL is now the fund’s #1 position.

0
121

San Francisco-based HMI Capital filed a 13G this morning disclosing a 6.11% position in SailPoint Technologies Holdings (SAIL). The software company was HMI’s #12 holding as of the second quarter’s close. But after HMI Capital increased its SailPoint stake by 162%, purchasing 3.4 million additional shares as of October 22, SAIL becomes HMI’s top position.

SailPoint Technologies provides security software products and services. The company enables customers to govern the digital identities of employees, contractors, business partners and other users, and manage their constantly changing access rights to enterprise applications and data. The company boasts a 29.64% annual growth over the last three years. In August, HMI reported Q2 revenue of $92.5 million, a 47% increase over Q2 2019.

On Oct. 1, Morgan Stanley increased its rating on SAIL from Equal-weight to Overweight and raised the price target for the stock from $23 to $50. SAIL closed at $41.51 on Oct. 30. Analyst Hamza Fodderwala said an “increasingly cloud-based and remote workforce is driving a shift in security demand towards Identity Management,” an area where SAIL is a “key beneficiary.”

Morgan Stanley upgraded SAIL on Oct. 1 from Equal-weight to Overweight, with a target of $50.

The analyst thinks an aggressive SaaS push from management “could drive more significant upside.” Fodderwala said that the Q2 report in August “showed early innings of demand inflection,” which should continue into the second half of the fiscal year.

HMI Capital, founded by Managing Partner and co-CIO Mick Hellman in 2008, has shown a knack for picking tech stocks. The hedge fund carries a WhaleScore of 98, meaning HMI’s 13F portfolio returns are in the top 2% of all funds in the hedge fund universe over the last several years. Since HMI began filing 13Fs in 2013, a portfolio that held equal-weight positions in the fund’s top 10 long positions, rebalanced quarterly, has averaged a 24.80% annual return. That’s nearly double the total return of the S&P 500.

Performance of an equal-weighted portfolio of HMI Capital’s top 10 holdings, rebalanced quarterly, since 2013. Light green is HMI return. Dark green the S&P 500 total return index.

HMI Capital increased its SailPoint stake after SAIL pulled back from an all-time high of $48.13 hit on Oct. 13.

Here’s how HMI describes its “Investment Objectives and Strategies” in the fund’s most recent ADV part II filed with the SEC.


Established during the 2008 – 2009 global financial crisis, HMI Capital, LLC seeks to invest in the highest quality businesses when capital markets put pressure on their valuations. Taking a long-term perspective with a strong value orientation, HMI seeks the best opportunities globally, primarily in public equities and at times distressed credit. The firm holds a concentrated portfolio of approximately 10 – 12 deeply researched names in three distinct industry sectors: Software, Internet and Media, and Financial Services. Through this approach, HMI strives to deliver high risk-adjusted real returns over long timeframes with low probability of permanent loss of capital.

HMI’s Q2 13F portfolio, now reflecting the recent increase in SAIL and another 13G filing from Aug. 5, New Relic (NEWR).
StockSectorShares HeldMarket Value% of PortRankChange in shares% OwnershipQtr 1stRecent PriceSourceSource Date
SAILINFORMATION TECHNOLOGY5,543,273$250,445,07411.2313,433,7186.11%41.5113G10/22/20
CRMINFORMATION TECHNOLOGY1,323,244$247,883,00011.12211,3000.15%Q3 2019232.2713F6/30/20
GOOGCOMMUNICATIONS161,345$228,079,00010.2331,5000.02%Q4 20181,621.0113F6/30/20
NEWRINFORMATION TECHNOLOGY3,989,021$222,467,7019.984750,0006.62%60.6613G8/5/20
SQFINANCE2,048,827$215,004,0009.645554,2230.46%Q4 2019154.8813F6/30/20
BXFINANCE3,319,935$188,108,0008.446No Change0.48%Q1 201650.4213F6/30/20
ARESFINANCE4,672,855$185,512,0008.3272,464,5513.26%Q1 202042.313F6/30/20
FBCOMMUNICATIONS710,784$161,398,0007.248340,8760.03%Q1 2020263.1113F6/30/20
ADSKINFORMATION TECHNOLOGY600,000$143,514,0006.449129,1450.27%Q4 2012235.5413F6/30/20
MAFINANCE468,000$138,388,0006.211042,0000.05%Q2 2019288.6413F6/30/20
CARGCONSUMER DISCRETIONARY4,823,551$103,609,8754.65111,661,4494.27%19.9313G10/14/20
DTINFORMATION TECHNOLOGY2,321,093$94,236,0004.23121,758,8050.83%Q1 202035.3113F6/30/20
PLANINFORMATION TECHNOLOGY1,121,903$50,833,0002.28132,060,0000.80%Q4 201855.3513F6/30/20

Disclaimer:

This investment blog (the “Blog”) is created and authored by Mark W. Gaffney (the “Content Creator”). The Blog is provided for informational and entertainment purposes only (collectively, the “Blog Service”). The information in the Blog constitutes the Content Creator’s own opinions. None of the information contained in the Blog constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You understand that the Content Creator is not advising, and will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information contained in the Blog may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.

From time to time, the Content Creator or its affiliates may hold positions or other interests in securities mentioned in the Blog. The Content Creator or affiliates may trade for their own account(s) based on the information presented, and may also take positions inconsistent with the views expressed in its messages on the Blog.

The Content Creator may hold licenses with FINRA, the SEC or states securities authorities. These licenses may or may not be disclosed by the Content Creator in the Blog.

Investing in the investments discussed in the Blog may be risky and speculative. The companies may have limited operating histories, little available public information. The stocks discussed may be volatile and illiquid. Trading in such securities can result in immediate and substantial losses of the capital invested. You should only invest risk capital not required for other purposes, such as retirement savings, student loans, mortgages or education.

Full Disclaimer.