Do Hedge Funds Love Etsy Inc (ETSY)?

Is Etsy Inc (NASDAQ:ETSY) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Etsy Inc (NASDAQ:ETSY) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 47 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that ETSY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare ETSY to other stocks including V.F. Corporation (NYSE:VFC), Deutsche Bank Aktiengesellschaft (NYSE:DB), and Peloton Interactive, Inc. (NASDAQ:PTON) to get a better sense of its popularity.

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. With all of this in mind we’re going to take a peek at the recent hedge fund action regarding Etsy Inc (NASDAQ:ETSY).

Ken Griffin of Citadel Investment Group

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

At Q3’s end, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ETSY over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

More specifically, Citadel Investment Group was the largest shareholder of Etsy Inc (NASDAQ:ETSY), with a stake worth $285.9 million reported as of the end of September. Trailing Citadel Investment Group was Two Sigma Advisors, which amassed a stake valued at $225.1 million. Citadel Investment Group, Goodnow Investment Group, and ARK Investment 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 Goodnow Investment Group allocated the biggest weight to Etsy Inc (NASDAQ:ETSY), around 13.19% of its 13F portfolio. Emerson Point Capital is also relatively very bullish on the stock, setting aside 7.32 percent of its 13F equity portfolio to ETSY.

Due to the fact that Etsy Inc (NASDAQ:ETSY) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there were a few money managers that elected to cut their entire stakes by the end of the third quarter. It’s worth mentioning that Li Ran’s Half Sky Capital dumped the biggest investment of the 750 funds followed by Insider Monkey, valued at close to $43.7 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund cut about $35.9 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Etsy Inc (NASDAQ:ETSY) but similarly valued. We will take a look at V.F. Corporation (NYSE:VFC), Deutsche Bank Aktiengesellschaft (NYSE:DB), Peloton Interactive, Inc. (NASDAQ:PTON), Best Buy Co., Inc. (NYSE:BBY), Interactive Brokers Group, Inc. (NASDAQ:IBKR), Energy Transfer L.P. (NYSE:ET), and ONEOK, Inc. (NYSE:OKE). This group of stocks’ market caps match ETSY’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.6 hedge funds with bullish positions and the average amount invested in these stocks was $1389 million. That figure was $1436 million in ETSY’s case. Peloton Interactive, Inc. (NASDAQ:PTON) is the most popular stock in this table. On the other hand Deutsche Bank Aktiengesellschaft (NYSE:DB) is the least popular one with only 15 bullish hedge fund positions. Etsy Inc (NASDAQ:ETSY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ETSY is 64.2. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on ETSY as the stock returned 32% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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