Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Upstart Holdings, Inc. (NASDAQ:UPST).
Upstart Holdings, Inc. (NASDAQ:UPST) shareholders have witnessed an increase in hedge fund sentiment of late. Upstart Holdings, Inc. (NASDAQ:UPST) was in 23 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 21 hedge funds in our database with UPST holdings at the end of June. Our calculations also showed that UPST isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Alex Sacerdote of Whale Rock Capital Management
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. Keeping this in mind let’s take a glance at the latest hedge fund action encompassing Upstart Holdings, Inc. (NASDAQ:UPST).
Do Hedge Funds Think UPST Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in UPST over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Upstart Holdings, Inc. (NASDAQ:UPST) was held by Third Point, which reported holding $3923.9 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $292 million position. Other investors bullish on the company included Whale Rock Capital Management, Citadel Investment Group, and D E Shaw. In terms of the portfolio weights assigned to each position Third Point allocated the biggest weight to Upstart Holdings, Inc. (NASDAQ:UPST), around 21.42% of its 13F portfolio. Kuvari Partners is also relatively very bullish on the stock, earmarking 15.02 percent of its 13F equity portfolio to UPST.
Now, key money managers were leading the bulls’ herd. Whale Rock Capital Management, managed by Alex Sacerdote, initiated the most outsized position in Upstart Holdings, Inc. (NASDAQ:UPST). Whale Rock Capital Management had $262.6 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $168.3 million position during the quarter. The following funds were also among the new UPST investors: D. E. Shaw’s D E Shaw, Matthew Hulsizer’s PEAK6 Capital Management, and Morris Mark’s Mark Asset Management.
Let’s check out hedge fund activity in other stocks similar to Upstart Holdings, Inc. (NASDAQ:UPST). We will take a look at Yum China Holdings, Inc. (NYSE:YUMC), Hartford Financial Services Group Inc (NYSE:HIG), Hess Corporation (NYSE:HES), Devon Energy Corporation (NYSE:DVN), ZoomInfo Technologies Inc. (NASDAQ:ZI), Caesars Entertainment Inc. (NASDAQ:CZR), and Credit Suisse Group AG (NYSE:CS). This group of stocks’ market values resemble UPST’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| YUMC | 30 | 832648 | -2 |
| HIG | 34 | 941705 | -9 |
| HES | 27 | 726783 | -4 |
| DVN | 48 | 1400610 | -2 |
| ZI | 57 | 1960736 | 22 |
| CZR | 64 | 1882913 | -9 |
| CS | 8 | 76139 | -2 |
| Average | 38.3 | 1117362 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.3 hedge funds with bullish positions and the average amount invested in these stocks was $1117 million. That figure was $5076 million in UPST’s case. Caesars Entertainment Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand Credit Suisse Group AG (NYSE:CS) is the least popular one with only 8 bullish hedge fund positions. Upstart Holdings, Inc. (NASDAQ:UPST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UPST is 50.4. 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 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 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately UPST wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); UPST investors were disappointed as the stock returned -43.2% since the end of September (through 12/9) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
