Etsy to Go Public: What Hedge Funds Think of Other Online Marketplaces

Next is Amazon.com, Inc. (NASDAQ:AMZN), the behemoth of online retailers that has long been maligned by investors for its inability to turn its massive operations and revenues into any kind of significant earnings. Like Alibaba, Amazon.com, Inc. (NASDAQ:AMZN) is in the midst of trying to expand its presence internationally, even going so far as to open a store on its rival’s Chinese marketplace.

There was strong interest in Amazon among funds from our database last quarter, with fund ownership increasing to 76 from 66, and capital invested ballooning to $5.91 billion from just $4.49 billion, despite Amazon shares dipping slightly during the quarter, down by 3.58%. A strong earnings report in late January (and one which showed significant earnings growth of 18% when excluding currency fluctuations) led to a large pop in Amazon’s stock, with shares increasing by 22.47% year-to-date. Lansdowne Partners is the largest shareholder among hedge funds that we track, with 2.73 million shares, as of the end of 2014

Lastly is eBay Inc (NASDAQ:EBAY), which did battle with activist investor Carl Icahn throughout 2014 before finally succumbing to one of his demands and agreeing to spin off its PayPal division near the end of the third quarter. Icahn was the largest shareholder of eBay at the end of the year, with ownership of 46.27 million shares.

Despite the announcement, fund ownership slipped slightly throughout the fourth quarter, down to 87 funds from 90, while gaining slightly in capital inflow to $11.26 billion from $11.11 billion. However the stock’s gain of 8.65% compared to just a 1.4% increase in capital during the quarter means that funds retained less shares at the end of the year than they did at the end of the third quarter. Some were spooked off by Apple’s release of its Pay platform in early October, as eBay shares tanked until the middle of the month before rebounding.

Can Etsy compete with these behemoths? Is it a wise investment? We’ll continue to monitor its IPO and the reaction of funds in the coming weeks.

Disclosure: None