Software companies drawing interest for enhancing business operations

In recent months, several hedge funds and institutional investors have shown interest in acquiring stakes in tech platform providers like payroll software company Paylocity and Okta, Inc., a company that offers identity-based tech solutions. Okta’s solutions cater to both customers and the workforce, providing identity authentication, authorization, and other functionalities. MarketBeat reports that the company has received a buy rating from sixteen research analysts, with Westpark Capital setting a target price of $140 for Okta’s shares in a research note published in December. Morgan Stanley also raised its price objective for the company’s stock, from $92 to $97, during the same month, while DA Davidson upped its price target for Okta from $75 to $90. Armistice Capital, a global value-oriented and event-driven hedge fund, acquired 4,139 shares of Okta’s stock in the third quarter of 2024, as indicated in the 13F form submitted to the SEC for the Sept. 30 reporting date. Other institutional investors, such as Blue Trust Inc. and Legacy Investment Solutions LLC, also purchased shares of Okta during the same quarter.

Paylocity, a platform designed to address benefits, core HR, payroll, talent, and workforce management needs, was another company that drew interest from institutional investors like Armistice Capital and Prospera Private Wealth LLC in the third quarter of 2024. Armistice Capital, which did not own any shares of Paylocity’s stock in its June 30 SEC filing, reported acquiring 1,424 shares of the company’s stock in the 13F form submitted for the Sept. 30 filing. Prospera Private Wealth LLC’s new stake in Paylocity during the same quarter was valued at approximately $39,000. Other investors, including Signaturefd LLC and Quarry LP, increased their holdings of Paylocity’s stock in the third quarter. Signaturefd LLC bought an additional 167 shares, while Quarry LP purchased 185 more shares.

Besides Okta and Paylocity, institutional investors also looked at other tech companies in 2024, such as Datadog and Adobe. Datadog provides software-as-a-service infrastructure, network, and application monitoring solutions, with more than 78% of its stock owned by institutional investors. Armistice Capital and Meeder Asset Management Inc. increased their ownership of Datadog’s stock in the third quarter, with Armistice Capital reporting a 30% increase in shares held. Adobe, known for its digital media, digital experience, and publishing and advertising segments, saw a rise in institutional investor ownership to about 82% as of February 2025. Meeder Asset Management added 61 shares of Adobe’s stock to its portfolio in the third quarter, while Armistice Capital increased its shares from 27,149 to 31,382 during the same period.

Overall, institutional investors continue to show interest in companies that offer software solutions to enhance business operations, demonstrating confidence in the growth potential of these tech platforms.