How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Bumble Inc. (NASDAQ:BMBL) and determine whether hedge funds had an edge regarding this stock.
Is Bumble Inc. (NASDAQ:BMBL) a buy here? Money managers were in an optimistic mood. The number of bullish hedge fund bets moved up by 12 in recent months. Bumble Inc. (NASDAQ:BMBL) was in 35 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BMBL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 23 hedge funds in our database with BMBL holdings at the end of June.
Chase Coleman of Tiger Global
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. Keeping this in mind let’s take a peek at the latest hedge fund action surrounding Bumble Inc. (NASDAQ:BMBL).
Do Hedge Funds Think BMBL Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 52% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in BMBL a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Griffin’s Citadel Investment Group has the biggest position in Bumble Inc. (NASDAQ:BMBL), worth close to $163.8 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Anomaly Capital Management, managed by Ben Jacobs, which holds a $61.9 million position; 4% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism encompass Brad Gerstner’s Altimeter Capital Management, Chase Coleman’s Tiger Global Management LLC and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Anomaly Capital Management allocated the biggest weight to Bumble Inc. (NASDAQ:BMBL), around 3.97% of its 13F portfolio. Mondrian Capital is also relatively very bullish on the stock, dishing out 1.71 percent of its 13F equity portfolio to BMBL.
As one would reasonably expect, key hedge funds have been driving this bullishness. Anomaly Capital Management, managed by Ben Jacobs, established the most valuable position in Bumble Inc. (NASDAQ:BMBL). Anomaly Capital Management had $61.9 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $44.7 million investment in the stock during the quarter. The other funds with new positions in the stock are James Parsons’s Junto Capital Management, Joseph Samuels’s Islet Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s also examine hedge fund activity in other stocks similar to Bumble Inc. (NASDAQ:BMBL). These stocks are Core & Main Inc. (NYSE:CNM), Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), Synovus Financial Corp. (NYSE:SNV), Shift4 Payments, Inc. (NYSE:FOUR), Coty Inc (NYSE:COTY), MasTec, Inc. (NYSE:MTZ), and Elbit Systems Ltd. (NASDAQ:ESLT). This group of stocks’ market valuations match BMBL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNM | 12 | 276636 | 12 |
| AVAL | 8 | 12870 | 4 |
| SNV | 29 | 235408 | -1 |
| FOUR | 32 | 628319 | 1 |
| COTY | 40 | 519189 | 10 |
| MTZ | 24 | 439777 | -15 |
| ESLT | 4 | 56484 | 0 |
| Average | 21.3 | 309812 | 1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $310 million. That figure was $609 million in BMBL’s case. Coty Inc (NYSE:COTY) is the most popular stock in this table. On the other hand Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular one with only 4 bullish hedge fund positions. Bumble Inc. (NASDAQ:BMBL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BMBL is 83.1. 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, BMBL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BMBL were disappointed as the stock returned -41% 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.
