We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Fiverr International Ltd. (NYSE:FVRR).
Fiverr International Ltd. (NYSE:FVRR) has seen an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that FVRR isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the latest hedge fund action encompassing Fiverr International Ltd. (NYSE:FVRR).
How are hedge funds trading Fiverr International Ltd. (NYSE:FVRR)?
Heading into the third quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9 from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in FVRR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Light Street Capital, managed by Glen Kacher, holds the largest position in Fiverr International Ltd. (NYSE:FVRR). Light Street Capital has a $21.4 million position in the stock, comprising 1.2% of its 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $4.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Benjamin A. Smith’s Laurion Capital Management, Ken Griffin’s Citadel Investment Group and Nick Niell’s Arrowgrass Capital Partners.
As one would reasonably expect, specific money managers have been driving this bullishness. Light Street Capital, managed by Glen Kacher, established the most valuable position in Fiverr International Ltd. (NYSE:FVRR). Light Street Capital had $21.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $4.4 million investment in the stock during the quarter. The following funds were also among the new FVRR investors: Benjamin A. Smith’s Laurion Capital Management, Ken Griffin’s Citadel Investment Group, and Nick Niell’s Arrowgrass Capital Partners.
Let’s go over hedge fund activity in other stocks similar to Fiverr International Ltd. (NYSE:FVRR). These stocks are Everi Holdings Inc (NYSE:EVRI), Tenneco Inc (NYSE:TEN), Seabridge Gold, Inc. (NYSE:SA), and EDENOR S.A. (NYSE:EDN). All of these stocks’ market caps are similar to FVRR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EVRI | 24 | 272248 | -2 |
| TEN | 12 | 113355 | -14 |
| SA | 9 | 37822 | 1 |
| EDN | 4 | 3437 | -1 |
| Average | 12.25 | 106716 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $39 million in FVRR’s case. Everi Holdings Inc (NYSE:EVRI) is the most popular stock in this table. On the other hand EDENOR S.A. (NYSE:EDN) is the least popular one with only 4 bullish hedge fund positions. Fiverr International Ltd. (NYSE:FVRR) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately FVRR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); FVRR investors were disappointed as the stock returned -37% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.