13-F Filings For C3.ai Show A Large Increase In Institutional Ownership
Nov. 21, 2021
Summary
In the most recent quarter (Q3, 9/30/2021), institutions added and/or held 45,911,812 shares of C3.ai compared to those who reduced their holdings (-5,271,452 shares), a positive ratio of 9/1.43% more new positions were added than positions closed. There was an overall 9% increase in institutional ownership in Q3 2021.
The months-long sell-off in shares since the IPO has been viewed as a buying opportunity by institutional investors.
The 25% sell-off in C3.ai since Monday, November 15, 2021, on NO NEWS offers a new buying point for risk-on investors.
C3.ai is now trading below its IPO level of $42.
Ker_vii/iStock via Getty Images
The previous week has been a brutal one for C3.ai ( AI) investors, with shares falling from a high of $51.65 on Monday, November 15th, to a low of $39.33 on Friday morning, November 19, 2021, a fall of -24% in 5 days on no news.
But what have institutional investors been doing with their C3.ai shares over the previous summer quarter (Q3, 2021)?
Buying or adding to their positions by a positive ratio of 9 to 1 over selling/decreasing.
 Source: Nasdaq Institutional Holdings - AI
There are some key takeaways from the data above:
- The total of actively-held and new positions increased by a large margin over decreased positions (by a ratio of 9/1, or 45.9 million shares/5.27 million).
- The number of institutions that added positions in C3 vastly outnumbered those that sold their positions.
- The purchasing activity was widespread across a broad group of institutional investors.
- Of C3's largest 25 shareholders, only 3 reduced their holdings, and of those three, only two, TPG Group Holdings (-24%), and Goldman Sachs (-19%) were a significant reduction.
- The positive increase for Q3 2021 within the top 25 names, however, was large (see chart below).
| OWNER | Date | HELD (SHARES) | CHANGE(SHARES) | CHANGE (%) | VALUE | | VANGUARD | 9/30/2021 | 6,206,567 | 3,744,356 | 152.073% | $247,704,000 | | SUSQUEHANNA | 9/30/2021 | 2,335,849 | 850,583 | 57.268% | $93,224,000 | | MIRAE ASSET | 9/30/2021 | 1,473,643 | 1,442,513 | 4633.84% | $58,813,000 | | TUDOR INVST. | 9/30/2021 | 742,257 | 75,548 | 11.331% | $29,623,000 | | GEODE | 9/30/2021 | 691,432 | 496,030 | 253.851% | $27,595,000 | | STATE STREET | 9/30/2021 | 631,860 | 327,564 | 107.647% | $25,218,000 | | BNY MELLON | 9/30/2021 | 622,513 | 547,748 | 732.626% | $24,844,000 | | RENAISSANCE | 9/30/2021 | 589,800 | 533,200 | 942.049% | $23,539,000 | | MILLENNIUM | 9/30/2021 | 589,393 | 449,475 | 321.242% | $23,523,000 | | CHAR SCHWAB | 9/30/2021 | 526,083 | 448,021 | 573.93% | $20,996,000 | | LA FINANCIERE | 9/30/2021 | 428,000 | 102,000 | 31.288% | $17,081,000 | | SCOUT INVST. | 9/30/2021 | 394,426 | 54,436 | 16.011% | $15,742,000 | | KAYAK INVST. | 9/30/2021 | 318,398 | 144,200 | 82.779% | $12,707,000 |
There have been several recent articles on Seeking Alpha which have done an excellent job of delving into the fundamental and technological aspects of C3 AI. In the main, I would summarize their opinions as "Great technology, but still too expensive". Possibly the 25% haircut over the last 5 days might change the second part of that brief summary.
Its revenue growth continues at a brisk pace.
Source: Investor Presentation
And at its new price of around $40, the current Price/Sales ratio (by my pencil) is now close to 12.2, a far cry from the P/S ratio of 60 on 1/31/2021.
But C3's chart trades as if the mad-hatter was constantly changing his mind about it, swinging wildly from the mid $50s to the low $40s (and beyond!). This can probably be attributed to the large short-interest (16%) that has followed the company's insider-sales since the IPO lock-up period passed several months ago. Its shares trade in a highly-volatile fashion.
Investor takeaway
For investors willing to take a risk on the burgeoning software field of artificial intelligence, C3 is currently-trading below its IPO price of $42, and is excessively oversold (-25% in 5 days).
There has been significant institutional acquisitions by its top 25 holders during the recent quarter (Q3, 2021) by a ratio of 9 to 1 (holding/increasing over selling).
A trend-change has not occurred (yet) in the price of the shares, but a combination of consistent revenue and customer growth, along with sales growth to a wider and more numerous customer base, should eventually turn the tide.
The company has $1.1 billion in cash ($10.65/share) and infinitesimal debt ($4 million), so there is almost no chance of a default. Its total addressable market is in the hundreds of billions ($). Although the company has been around for over 10 years, its recent IPO is an early-mover in the artificial intelligence space, along with competitor Palantir ( PLTR).
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