Did Hedge Funds Get Genius Sports Ltd (GENI) Right?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Genius Sports Ltd (NYSE:GENI) and determine whether the smart money was really smart about this stock.

Genius Sports Ltd (NYSE:GENI) shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. Genius Sports Ltd (NYSE:GENI) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 39. There were 39 hedge funds in our database with GENI positions at the end of the second quarter. Our calculations also showed that GENI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a gander at the recent hedge fund action surrounding Genius Sports Ltd (NYSE:GENI).

Cathie Wood of ARK Investment Management

Do Hedge Funds Think GENI Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GENI over the last 25 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mina Faltas’s Washington Harbour Partners has the number one position in Genius Sports Ltd (NYSE:GENI), worth close to $96.6 million, accounting for 11.4% of its total 13F portfolio. The second most bullish fund manager is Eric Bannasch of Cadian Capital, with a $76.9 million position; 2.9% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish include Catherine D. Wood’s ARK Investment Management, Richard Mashaal’s Rima Senvest Management and Matthew Drapkin and Steven R. Becker’s Becker Drapkin Management. In terms of the portfolio weights assigned to each position Washington Harbour Partners allocated the biggest weight to Genius Sports Ltd (NYSE:GENI), around 11.43% of its 13F portfolio. 1060 Capital Management is also relatively very bullish on the stock, setting aside 7.39 percent of its 13F equity portfolio to GENI.

Seeing as Genius Sports Ltd (NYSE:GENI) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of hedge funds that decided to sell off their positions entirely last quarter. At the top of the heap, Christian Leone’s Luxor Capital Group sold off the largest stake of the “upper crust” of funds tracked by Insider Monkey, comprising about $21.3 million in stock. Mark Coe’s fund, Intrinsic Edge Capital, also dropped its stock, about $17.5 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 8 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to Genius Sports Ltd (NYSE:GENI). These stocks are F.N.B. Corp (NYSE:FNB), Grupo Simec S.A.B. de C.V. (NYSE:SIM), Franklin Electric Co., Inc. (NASDAQ:FELE), NewMarket Corporation (NYSE:NEU), Coca-Cola Consolidated Inc. (NASDAQ:COKE), EPR Properties (NYSE:EPR), and Sunnova Energy International Inc. (NYSE:NOVA). All of these stocks’ market caps are closest to GENI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.9 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $401 million in GENI’s case. Sunnova Energy International Inc. (NYSE:NOVA) is the most popular stock in this table. On the other hand Grupo Simec S.A.B. de C.V. (NYSE:SIM) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Genius Sports Ltd (NYSE:GENI) is more popular among hedge funds. Our overall hedge fund sentiment score for GENI is 70.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, GENI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GENI were disappointed as the stock returned -65.3% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.