As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Skillz Inc. (NYSE:SKLZ).
Skillz Inc. (NYSE:SKLZ) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistic is 33. SKLZ shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 26 hedge funds in our database with SKLZ positions at the end of the first quarter. Our calculations also showed that SKLZ isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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Philippe Laffont of Coatue Management
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Do Hedge Funds Think SKLZ Is A Good Stock To Buy Now?
At second quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SKLZ over the last 24 quarters. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Skillz Inc. (NYSE:SKLZ) was held by ARK Investment Management, which reported holding $534.4 million worth of stock at the end of June. It was followed by Wildcat Capital Management with a $461.9 million position. Other investors bullish on the company included Washington Harbour Partners, Coatue Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Wildcat Capital Management allocated the biggest weight to Skillz Inc. (NYSE:SKLZ), around 52.41% of its 13F portfolio. Washington Harbour Partners is also relatively very bullish on the stock, designating 7.97 percent of its 13F equity portfolio to SKLZ.
Seeing as Skillz Inc. (NYSE:SKLZ) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies who sold off their entire stakes last quarter. At the top of the heap, Jonathan Barrett and Paul Segal’s Luminus Management sold off the biggest investment of the 750 funds watched by Insider Monkey, worth an estimated $13.8 million in stock, and Joseph Samuels’s Islet Management was right behind this move, as the fund cut about $9.5 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 6 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Skillz Inc. (NYSE:SKLZ) but similarly valued. These stocks are Kohl’s Corporation (NYSE:KSS), Oshkosh Corporation (NYSE:OSK), Autoliv Inc. (NYSE:ALV), Omega Healthcare Investors Inc (NYSE:OHI), US Foods Holding Corp. (NYSE:USFD), Genpact Limited (NYSE:G), and TFI International Inc. (NYSE:TFII). This group of stocks’ market valuations resemble SKLZ’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KSS | 40 | 1340630 | 5 |
| OSK | 28 | 360479 | 2 |
| ALV | 23 | 860834 | 3 |
| OHI | 20 | 142609 | -5 |
| USFD | 35 | 1399474 | -5 |
| G | 22 | 234361 | -1 |
| TFII | 13 | 101129 | -6 |
| Average | 25.9 | 634217 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $634 million. That figure was $1138 million in SKLZ’s case. Kohl’s Corporation (NYSE:KSS) is the most popular stock in this table. On the other hand TFI International Inc. (NYSE:TFII) is the least popular one with only 13 bullish hedge fund positions. Skillz Inc. (NYSE:SKLZ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SKLZ is 30.1. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately SKLZ wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SKLZ investors were disappointed as the stock returned -53.5% since the end of June (through 10/22) 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 in 2021.
Follow Skillz Inc. (NYSE:SKLZ)
Follow Skillz Inc. (NYSE:SKLZ)
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Disclosure: None. This article was originally published at Insider Monkey.
