We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Etsy Inc (NASDAQ:ETSY) based on that data.
Etsy Inc (NASDAQ:ETSY) has experienced a decrease in support from the world’s most elite money managers in recent months. Our calculations also showed that ETSY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David E. Shaw of D.E. Shaw
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a glance at the fresh hedge fund action surrounding Etsy Inc (NASDAQ:ETSY).
Hedge fund activity in Etsy Inc (NASDAQ:ETSY)
At the end of the first quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the fourth quarter of 2019. By comparison, 39 hedge funds held shares or bullish call options in ETSY a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Etsy Inc (NASDAQ:ETSY) was held by Renaissance Technologies, which reported holding $163.3 million worth of stock at the end of September. It was followed by Cadian Capital with a $151 million position. Other investors bullish on the company included D E Shaw, Valinor Management LLC, and Half Sky Capital. In terms of the portfolio weights assigned to each position Half Sky Capital allocated the biggest weight to Etsy Inc (NASDAQ:ETSY), around 19.73% of its 13F portfolio. Goodnow Investment Group is also relatively very bullish on the stock, earmarking 8.66 percent of its 13F equity portfolio to ETSY.
Seeing as Etsy Inc (NASDAQ:ETSY) has faced declining sentiment from hedge fund managers, logic holds that there was a specific group of funds that elected to cut their entire stakes last quarter. It’s worth mentioning that Mark Moore’s ThornTree Capital Partners sold off the largest investment of the 750 funds monitored by Insider Monkey, totaling close to $26.3 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also sold off its stock, about $21.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 8 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to Etsy Inc (NASDAQ:ETSY). These stocks are XPO Logistics Inc (NYSE:XPO), FTI Consulting, Inc. (NYSE:FCN), Santander Consumer USA Holdings Inc (NYSE:SC), and Nielsen Holdings plc (NYSE:NLSN). This group of stocks’ market caps are similar to ETSY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XPO | 36 | 1719666 | 4 |
| FCN | 19 | 175190 | -2 |
| SC | 20 | 423643 | -7 |
| NLSN | 33 | 762761 | 4 |
| Average | 27 | 770315 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $770 million. That figure was $713 million in ETSY’s case. XPO Logistics Inc (NYSE:XPO) is the most popular stock in this table. On the other hand FTI Consulting, Inc. (NYSE:FCN) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Etsy Inc (NASDAQ:ETSY) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on ETSY as the stock returned 110.7% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
