Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Zynga Inc (NASDAQ:ZNGA) based on that data and determine whether they were really smart about the stock.
Zynga Inc (NASDAQ:ZNGA) shareholders have witnessed an increase in hedge fund interest in recent months. Zynga Inc (NASDAQ:ZNGA) was in 52 hedge funds’ portfolios at the end of September. The all time high for this statistic is 59. Our calculations also showed that ZNGA 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. Keeping this in mind we’re going to review the recent hedge fund action surrounding Zynga Inc (NASDAQ:ZNGA).
Harold Levy of Iridian Asset Management
Do Hedge Funds Think ZNGA Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 52 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ZNGA over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Corvex Capital was the largest shareholder of Zynga Inc (NASDAQ:ZNGA), with a stake worth $67.9 million reported as of the end of September. Trailing Corvex Capital was Iridian Asset Management, which amassed a stake valued at $49.2 million. Point72 Asset Management, Parsifal Capital Management, and Discovery Capital 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 Tiger Legatus Capital allocated the biggest weight to Zynga Inc (NASDAQ:ZNGA), around 6.75% of its 13F portfolio. Blue Grotto Capital is also relatively very bullish on the stock, dishing out 5.23 percent of its 13F equity portfolio to ZNGA.
Consequently, key hedge funds have jumped into Zynga Inc (NASDAQ:ZNGA) headfirst. Greenhouse Funds, managed by Joe Milano, initiated the most valuable position in Zynga Inc (NASDAQ:ZNGA). Greenhouse Funds had $34.2 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $24.9 million investment in the stock during the quarter. The following funds were also among the new ZNGA investors: Dmitry Balyasny’s Balyasny Asset Management, Keith Meister’s Corvex Capital, and Richard Mashaal’s Rima Senvest Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Zynga Inc (NASDAQ:ZNGA) but similarly valued. These stocks are The Western Union Company (NYSE:WU), Sealed Air Corporation (NYSE:SEE), Under Armour Inc (NYSE:UA), Rexford Industrial Realty Inc (NYSE:REXR), Phillips 66 Partners LP (NYSE:PSXP), The Scotts Miracle-Gro Company (NYSE:SMG), and Ralph Lauren Corporation (NYSE:RL). This group of stocks’ market values are similar to ZNGA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WU | 27 | 234768 | -4 |
| SEE | 33 | 626876 | 5 |
| UA | 48 | 1643556 | -3 |
| REXR | 29 | 358442 | 8 |
| PSXP | 5 | 31682 | 0 |
| SMG | 30 | 257473 | -2 |
| RL | 25 | 444724 | -7 |
| Average | 28.1 | 513932 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.1 hedge funds with bullish positions and the average amount invested in these stocks was $514 million. That figure was $604 million in ZNGA’s case. Under Armour Inc (NYSE:UA) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Zynga Inc (NASDAQ:ZNGA) is more popular among hedge funds. Our overall hedge fund sentiment score for ZNGA is 84.4. 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. 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 returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on ZNGA as the stock returned 20.5% since the end of September (through 1/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
