Do These Hedge Funds Regret Dumping eBay Inc (EBAY)?

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not eBay Inc (NASDAQ:EBAY) makes for a good investment right now.

Is eBay Inc (NASDAQ:EBAY) a buy, sell, or hold? Prominent investors were in a pessimistic mood. The number of bullish hedge fund positions fell by 12 in recent months. eBay Inc (NASDAQ:EBAY) was in 39 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 83. Our calculations also showed that EBAY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 51 hedge funds in our database with EBAY holdings at the end of March.

To most shareholders, hedge funds are seen as underperforming, outdated financial tools of years past. While there are over 8000 funds in operation today, We look at the masters of this club, around 850 funds. These money managers shepherd bulk of the hedge fund industry’s total capital, and by watching their unrivaled investments, Insider Monkey has brought to light numerous investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Seth Klarman of Baupost Group

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 are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a look at the fresh hedge fund action regarding eBay Inc (NASDAQ:EBAY).

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

At Q2’s end, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from the first quarter of 2020. By comparison, 58 hedge funds held shares or bullish call options in EBAY a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

More specifically, Baupost Group was the largest shareholder of eBay Inc (NASDAQ:EBAY), with a stake worth $1045.5 million reported as of the end of June. Trailing Baupost Group was Ako Capital, which amassed a stake valued at $505 million. Rima Senvest Management, Lyrical Asset Management, and Citadel Investment Group 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 Rima Senvest Management allocated the biggest weight to eBay Inc (NASDAQ:EBAY), around 12.01% of its 13F portfolio. Ivy Lane Capital is also relatively very bullish on the stock, earmarking 9.48 percent of its 13F equity portfolio to EBAY.

Judging by the fact that eBay Inc (NASDAQ:EBAY) has witnessed bearish sentiment from the smart money, it’s easy to see that there was a specific group of money managers that decided to sell off their full holdings in the second quarter. Interestingly, Phill Gross and Robert Atchinson’s Adage Capital Management dumped the biggest stake of all the hedgies followed by Insider Monkey, valued at about $44.1 million in stock. Michael Rockefeller and KarláKroeker’s fund, Woodline Partners, also cut its stock, about $40.9 million worth. These moves are interesting, as aggregate hedge fund interest fell by 12 funds in the second quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as eBay Inc (NASDAQ:EBAY) but similarly valued. We will take a look at Marvell Technology , Inc. (NASDAQ:MRVL), Vodafone Group Plc (NASDAQ:VOD), Veeva Systems Inc (NYSE:VEEV), Dow Inc. (NYSE:DOW), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), Bilibili Inc. (NASDAQ:BILI), and IQVIA Holdings, Inc. (NYSE:IQV). This group of stocks’ market values match EBAY’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.9 hedge funds with bullish positions and the average amount invested in these stocks was $1432 million. That figure was $3126 million in EBAY’s case. IQVIA Holdings, Inc. (NYSE:IQV) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 11 bullish hedge fund positions. eBay Inc (NASDAQ:EBAY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EBAY is 31.2. 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 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on EBAY as the stock returned 7.9% since the end of the second quarter (through 11/5) and outperformed the market by an even larger margin.

Suggested Articles:

• 10 Best Agriculture Technology Stocks To Buy Now
• 10 Best Recycling Stocks to Invest In
• 10 Best Stocks to Buy With 50+ Years of Dividend Increases

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