Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards SoFi Technologies Inc. (NASDAQ:SOFI) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is SoFi Technologies Inc. (NASDAQ:SOFI) undervalued? Hedge funds were in a bullish mood. The number of long hedge fund bets increased by 33 recently. SoFi Technologies Inc. (NASDAQ:SOFI) was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that SOFI 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 let’s go over the new hedge fund action regarding SoFi Technologies Inc. (NASDAQ:SOFI).
Bill Miller of Miller Value Partners
Do Hedge Funds Think SOFI Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33 from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in SOFI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Silver Lake Partners was the largest shareholder of SoFi Technologies Inc. (NASDAQ:SOFI) , with a stake worth $611.6 million reported as of the end of September. Trailing Silver Lake Partners was Citadel Investment Group, which amassed a stake valued at $71.9 million. Miller Value Partners, Citadel Investment Group, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Silver Lake Partners allocated the biggest weight to SoFi Technologies Inc. (NASDAQ:SOFI) , around 3.75% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, setting aside 1.49 percent of its 13F equity portfolio to SOFI.
As aggregate interest increased, some big names were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most outsized position in SoFi Technologies Inc. (NASDAQ:SOFI) . Balyasny Asset Management had $13 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $8 million position during the quarter. The following funds were also among the new SOFI investors: Highbridge Capital Management, Daniel Johnson’s Gillson Capital, and Jody LaNasa’s Serengeti Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to SoFi Technologies Inc. (NASDAQ:SOFI) . These stocks are Discovery Inc. (NASDAQ:DISCA), Whirlpool Corporation (NYSE:WHR), Santander Consumer USA Holdings Inc (NYSE:SC), Aluminum Corp. of China Limited (NYSE:ACH), Kimco Realty Corp (NYSE:KIM), Floor & Decor Holdings, Inc. (NYSE:FND), and DENTSPLY SIRONA Inc. (NASDAQ:XRAY). All of these stocks’ market caps match SOFI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DISCA | 42 | 515818 | -2 |
| WHR | 29 | 1134128 | -3 |
| SC | 18 | 752098 | -8 |
| ACH | 7 | 20331 | 3 |
| KIM | 21 | 152556 | 1 |
| FND | 33 | 1417942 | 5 |
| XRAY | 35 | 745567 | 0 |
| Average | 26.4 | 676920 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $677 million. That figure was $853 million in SOFI’s case. Discovery Inc. (NASDAQ:DISCA) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 7 bullish hedge fund positions. SoFi Technologies Inc. (NASDAQ:SOFI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SOFI is 69.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 3.6 percentage points. Unfortunately, SOFI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SOFI were disappointed as the stock returned -21.4% since the end of September (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.
