After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Etsy Inc (NASDAQ:ETSY).
Hedge fund interest in Etsy Inc (NASDAQ:ETSY) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as SEI Investments Company (NASDAQ:SEIC), Athene Holding Ltd. (NYSE:ATH), and Neurocrine Biosciences, Inc. (NASDAQ:NBIX) to gather more data points.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a gander at the recent hedge fund action regarding Etsy Inc (NASDAQ:ETSY).
What have hedge funds been doing with Etsy Inc (NASDAQ:ETSY)?
At Q1’s end, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in ETSY a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Etsy Inc (NASDAQ:ETSY), which was worth $466.4 million at the end of the first quarter. On the second spot was D E Shaw which amassed $245.7 million worth of shares. Moreover, Two Sigma Advisors, Columbus Circle Investors, and Millennium Management were also bullish on Etsy Inc (NASDAQ:ETSY), allocating a large percentage of their portfolios to this stock.
Seeing as Etsy Inc (NASDAQ:ETSY) has witnessed falling interest from the smart money, it’s easy to see that there is a sect of money managers that decided to sell off their full holdings heading into Q3. It’s worth mentioning that Seth Wunder’s Black-and-White Capital cut the largest stake of all the hedgies followed by Insider Monkey, worth about $19 million in stock, and Bruce Garelick’s Garelick Capital Partners was right behind this move, as the fund sold off about $8.4 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Etsy Inc (NASDAQ:ETSY). We will take a look at SEI Investments Company (NASDAQ:SEIC), Athene Holding Ltd. (NYSE:ATH), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), and MongoDB, Inc. (NASDAQ:MDB). This group of stocks’ market values resemble ETSY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SEIC | 24 | 334310 | -1 |
| ATH | 35 | 1311162 | -8 |
| NBIX | 35 | 1105095 | -2 |
| MDB | 27 | 961692 | 4 |
| Average | 30.25 | 928065 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.25 hedge funds with bullish positions and the average amount invested in these stocks was $928 million. That figure was $1202 million in ETSY’s case. Athene Holding Ltd. (NYSE:ATH) is the most popular stock in this table. On the other hand SEI Investments Company (NASDAQ:SEIC) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Etsy Inc (NASDAQ:ETSY) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately ETSY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ETSY were disappointed as the stock returned -6.4% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
