nCino (NCNO): A Contrarian Play in Tech’s Oversold Zone?

Amid the tech sector’s ongoing volatility, nCino (NCNO) has emerged as a paradoxical case: a software company with a product suite that underpins $12 trillion in managed assets, yet its stock price has been battered by macroeconomic headwinds and institutional shifts. With hedge funds showing mixed signals and insiders selling aggressively, the question remains: Is NCNO now a contrarian buy in an oversold market? Let’s dissect the data.

The Overhang of Q1 2025 Data Gaps

To start, we must acknowledge a critical caveat: As of April 2025, Q1 2025 13F filings are not yet available. The SEC’s May 15 deadline means institutional positions through March 31, 2025, remain undisclosed. This leaves us relying on Q4 2024 data, which paints a complex picture.

The stock’s 30% decline year-to-date (as of Q1 2025) suggests oversold conditions, but without fresh institutional buying data, the narrative hinges on historical trends and analyst forecasts.

Hedge Fund Activity: A Tale of Contrarians and Exiters

In Q4 2024, hedge funds exhibited stark divergence:

The Bullish Few:
- Long Path Partners surged its stake by +44%, allocating 38% of its portfolio to NCNO.
- ShawSpring Partners nearly doubled its holdings (+116%), signaling confidence in the company’s long-term value.
- Wasatch Advisors and Invesco added +171% and +3,006% in shares, respectively, suggesting a strategic repositioning.

The Skeptics:
- Insight Holdings slashed its position by -72%, unloading $386 million in shares.
- Azora Capital exited entirely (-100%), while Graham Capital and EntryPoint Capital reduced stakes.

The net result? A 349,700-share decline in total holdings, reflecting a “wait-and-see” stance from some funds.

Insider Selling: A Cause for Concern or a Distraction?

The Q4 data also revealed alarming insider activity:
- CEO Jeff Horing sold $418 million in shares—92% of his holdings—marking the largest individual sale.
- CFO Greg Orenstein and other executives followed suit, raising red flags about executive confidence.

However, institutional buyers like T. Rowe Price and Wasatch Advisors appear to have shrugged off this noise, betting on NCNO’s core value proposition: its cloud-based banking platform, used by $12 trillion in managed assets, which remains a critical tool for financial institutions.

Analyst Sentiment: A Split but Bullish Median

Analysts are divided but leaning bullish:
- Raymond James, Needham, and Goldman Sachs reaffirmed “Outperform” ratings, citing NCNO’s 38% revenue growth in 2023 and $1.1 billion annual recurring revenue run rate.
- The median price target of $42.00 (vs. a mid-April 2025 price of ~$30) implies 40% upside.
- Stephens’ “Reduce” rating in late 2024 highlights near-term risks, such as declining gross margins and client concentration risks.

Conclusion: A Risky, but Calculated Contrarian Bet

nCino presents a compelling contrarian opportunity for investors willing to navigate short-term noise. Key data points support this thesis:

1. Oversold Metrics:
2. The stock’s 12-month price decline and below-average valuation (P/S ratio of 4.5x vs. peers at 6–8x) signal undervaluation.

3. Analyst upside targets suggest a re-rating is overdue.

4. Strategic Hedge Fund Buys:

5. While some funds exited, Long Path, ShawSpring, and Invesco are betting big—positions exceeding 10% of their portfolios—indicating conviction in NCNO’s long-term moat.

6. Product Resilience:

7. NCino’s platform remains “mission-critical” for banks, with 90%+ retention rates and a $1.7 billion total addressable market in core banking software.

However, risks are material:
- Insider selling may spook short-term traders.
- Margin pressures (2023 gross margin: 68%, down from 72% in 2021) require monitoring.

For the patient investor, the $42 price target—supported by institutional buying trends and a robust product—suggests NCNO could rebound sharply once Q1 2025’s 13F data reveals whether hedge funds are doubling down.

In short, NCNO checks the boxes for a contrarian play: oversold valuation, strategic buyers, and a defensible business model. The challenge? Waiting for Q1’s institutional data to confirm whether this dip is a buying opportunity or a trap.

Final Call: Buy with a 12–18 month horizon, targeting the $42 price objective. Monitor Q1 2025 filings closely.