Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Farfetch Limited (NYSE:FTCH) changed recently.
Is Farfetch Limited (NYSE:FTCH) the right investment to pursue these days? The smart money was turning bullish. The number of bullish hedge fund bets increased by 6 lately. Farfetch Limited (NYSE:FTCH) was in 63 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 57. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FTCH 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.
Gil Simon of SoMa Equity Partners
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. With all of this in mind let’s take a glance at the latest hedge fund action surrounding Farfetch Limited (NYSE:FTCH).
Do Hedge Funds Think FTCH Is A Good Stock To Buy Now?
At the end of June, a total of 63 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FTCH over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Lone Pine Capital was the largest shareholder of Farfetch Limited (NYSE:FTCH), with a stake worth $950.1 million reported as of the end of June. Trailing Lone Pine Capital was D1 Capital Partners, which amassed a stake valued at $474.6 million. D E Shaw, SoMa Equity Partners, and Holocene Advisors 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 Clearfield Capital allocated the biggest weight to Farfetch Limited (NYSE:FTCH), around 12.6% of its 13F portfolio. Kuvari Partners is also relatively very bullish on the stock, earmarking 10.6 percent of its 13F equity portfolio to FTCH.
Now, key money managers were leading the bulls’ herd. D1 Capital Partners, managed by Daniel Sundheim, established the most valuable position in Farfetch Limited (NYSE:FTCH). D1 Capital Partners had $474.6 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $193.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Robert Pitts’s Steadfast Capital Management, and Lee Ainslie’s Maverick Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Farfetch Limited (NYSE:FTCH). We will take a look at Affirm Holdings, Inc. (NASDAQ:AFRM), Raymond James Financial, Inc. (NYSE:RJF), Duke Realty Corporation (NYSE:DRE), Brookfield Property Partners LP (NYSE:BPY), Amcor plc (NYSE:AMCR), Clarivate Plc (NYSE:CLVT), and MarketAxess Holdings Inc. (NASDAQ:MKTX). This group of stocks’ market caps are similar to FTCH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AFRM | 25 | 823640 | -7 |
| RJF | 29 | 662093 | -4 |
| DRE | 15 | 49169 | -5 |
| BPY | 17 | 562276 | 0 |
| AMCR | 16 | 212571 | -1 |
| CLVT | 41 | 5366780 | 15 |
| MKTX | 31 | 605312 | -3 |
| Average | 24.9 | 1183120 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.9 hedge funds with bullish positions and the average amount invested in these stocks was $1183 million. That figure was $4253 million in FTCH’s case. Clarivate Plc (NYSE:CLVT) is the most popular stock in this table. On the other hand Duke Realty Corporation (NYSE:DRE) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Farfetch Limited (NYSE:FTCH) is more popular among hedge funds. Our overall hedge fund sentiment score for FTCH is 90. 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. 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 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Unfortunately FTCH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FTCH were disappointed as the stock returned -18.7% since the end of the second quarter (through 9/27) 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 since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
