Hedge Funds Are Cashing Out Of Genius Sports Ltd (GENI)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Genius Sports Ltd (NYSE:GENI)? The smart money sentiment can provide an answer to this question.

Is Genius Sports Ltd (NYSE:GENI) a buy, sell, or hold? The best stock pickers were cutting their exposure. The number of bullish hedge fund bets were cut by 8 lately. Genius Sports Ltd (NYSE:GENI) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 39. Our calculations also showed that GENI 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. Now we’re going to take a peek at the latest hedge fund action regarding Genius Sports Ltd (NYSE:GENI).

Cathie Wood of ARK Investment Management

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

At third quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the second quarter of 2021. On the other hand, there were a total of 0 hedge funds with a bullish position in GENI a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in Genius Sports Ltd (NYSE:GENI) was held by Washington Harbour Partners, which reported holding $96.6 million worth of stock at the end of September. It was followed by Cadian Capital with a $76.9 million position. Other investors bullish on the company included ARK Investment Management, Rima Senvest Management, and Becker Drapkin Management. In terms of the portfolio weights assigned to each position Washington Harbour Partners allocated the biggest weight to Genius Sports Ltd (NYSE:GENI), around 11.43% of its 13F portfolio. 1060 Capital Management is also relatively very bullish on the stock, designating 7.39 percent of its 13F equity portfolio to GENI.

Due to the fact that Genius Sports Ltd (NYSE:GENI) has faced falling interest from the entirety of the hedge funds we track, logic holds that there exists a select few hedgies who were dropping their entire stakes by the end of the third quarter. It’s worth mentioning that Christian Leone’s Luxor Capital Group said goodbye to the largest stake of the 750 funds followed by Insider Monkey, worth close to $21.3 million in stock, and Mark Coe’s Intrinsic Edge Capital was right behind this move, as the fund sold off about $17.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 8 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks similar to Genius Sports Ltd (NYSE:GENI). These stocks are F.N.B. Corp (NYSE:FNB), Grupo Simec S.A.B. de C.V. (NYSE:SIM), Franklin Electric Co., Inc. (NASDAQ:FELE), NewMarket Corporation (NYSE:NEU), Coca-Cola Consolidated Inc. (NASDAQ:COKE), EPR Properties (NYSE:EPR), and Sunnova Energy International Inc. (NYSE:NOVA). This group of stocks’ market values match GENI’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.9 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $401 million in GENI’s case. Sunnova Energy International Inc. (NYSE:NOVA) is the most popular stock in this table. On the other hand Grupo Simec S.A.B. de C.V. (NYSE:SIM) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Genius Sports Ltd (NYSE:GENI) is more popular among hedge funds. Our overall hedge fund sentiment score for GENI is 70.8. 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. Unfortunately GENI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GENI were disappointed as the stock returned -49% since the end of the third quarter (through 11/30) 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 most of these stocks already outperformed the market since 2019.

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