Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Roblox Corporation (NYSE:RBLX) in this article.
Roblox Corporation (NYSE:RBLX) investors should be aware of an increase in hedge fund sentiment recently. Roblox Corporation (NYSE:RBLX) was in 49 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 46. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that RBLX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Brad Gerstner of Altimeter Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, 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. Now let’s go over the recent hedge fund action surrounding Roblox Corporation (NYSE:RBLX).
Do Hedge Funds Think RBLX Is A Good Stock To Buy Now?
At second quarter’s end, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RBLX over the last 24 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Tiger Global Management LLC held the most valuable stake in Roblox Corporation (NYSE:RBLX), which was worth $2464.8 million at the end of the second quarter. On the second spot was Coatue Management which amassed $580.8 million worth of shares. Whale Rock Capital Management, Altimeter Capital 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 Ariose Capital allocated the biggest weight to Roblox Corporation (NYSE:RBLX), around 16.47% of its 13F portfolio. Himension Capital is also relatively very bullish on the stock, designating 16.35 percent of its 13F equity portfolio to RBLX.
Now, key money managers were leading the bulls’ herd. Coatue Management, managed by Philippe Laffont, assembled the most valuable position in Roblox Corporation (NYSE:RBLX). Coatue Management had $580.8 million invested in the company at the end of the quarter. Alex Sacerdote’s Whale Rock Capital Management also initiated a $390.2 million position during the quarter. The other funds with brand new RBLX positions are Renaissance Technologies, Richard Driehaus’s Driehaus Capital, and D. E. Shaw’s D E Shaw.
Let’s now review hedge fund activity in other stocks similar to Roblox Corporation (NYSE:RBLX). We will take a look at Canadian Pacific Railway Limited (NYSE:CP), Canadian Imperial Bank of Commerce (NYSE:CM), Dollar General Corp. (NYSE:DG), Ferrari N.V. (NYSE:RACE), Newmont Corporation (NYSE:NEM), Pinterest, Inc. (NYSE:PINS), and Keurig Dr Pepper Inc. (NASDAQ:KDP). This group of stocks’ market values are similar to RBLX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CP | 25 | 6353608 | -8 |
| CM | 15 | 382874 | 1 |
| DG | 45 | 1647046 | -7 |
| RACE | 27 | 992822 | 1 |
| NEM | 55 | 1255898 | 12 |
| PINS | 63 | 2915471 | -20 |
| KDP | 28 | 1197414 | -2 |
| Average | 36.9 | 2106448 | -3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $2106 million. That figure was $4915 million in RBLX’s case. Pinterest, Inc. (NYSE:PINS) is the most popular stock in this table. On the other hand Canadian Imperial Bank of Commerce (NYSE:CM) is the least popular one with only 15 bullish hedge fund positions. Roblox Corporation (NYSE:RBLX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RBLX is 73.4. 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 positive signal but 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 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately RBLX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RBLX were disappointed as the stock returned -16% since the end of June (through 10/1) 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 many of these stocks already outperformed the market since 2019.
Follow Roblox Corp (NYSE:RBLX)
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Disclosure: None. This article was originally published at Insider Monkey.
