Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Zynga Inc (NASDAQ:ZNGA) based on that data.
Zynga Inc (NASDAQ:ZNGA) investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that ZNGA 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.
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 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Rob Citrone of Discovery Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. Also, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. 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. With all of this in mind let’s analyze the fresh hedge fund action encompassing Zynga Inc (NASDAQ:ZNGA).
What have hedge funds been doing with Zynga Inc (NASDAQ:ZNGA)?
Heading into the second quarter of 2020, a total of 59 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ZNGA over the last 18 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Iridian Asset Management was the largest shareholder of Zynga Inc (NASDAQ:ZNGA), with a stake worth $160.2 million reported as of the end of September. Trailing Iridian Asset Management was Renaissance Technologies, which amassed a stake valued at $117.6 million. Cadian Capital, Two Sigma Advisors, and Citadel Investment Group 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 Greenvale Capital allocated the biggest weight to Zynga Inc (NASDAQ:ZNGA), around 12.6% of its 13F portfolio. Shelter Haven Capital Management is also relatively very bullish on the stock, dishing out 6.69 percent of its 13F equity portfolio to ZNGA.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Woodline Partners, managed by Michael Rockefeller and KarláKroeker, assembled the most valuable position in Zynga Inc (NASDAQ:ZNGA). Woodline Partners had $18.4 million invested in the company at the end of the quarter. Rob Citrone’s Discovery Capital Management also made a $14 million investment in the stock during the quarter. The other funds with brand new ZNGA positions are Ben Gambill’s Tiger Eye Capital, Joseph Samuels’s Islet Management, and Andrew Kurita’s Kettle Hill Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Zynga Inc (NASDAQ:ZNGA) but similarly valued. These stocks are F5 Networks, Inc. (NASDAQ:FFIV), Wynn Resorts, Limited (NASDAQ:WYNN), Advance Auto Parts, Inc. (NYSE:AAP), and Aspen Technology, Inc. (NASDAQ:AZPN). This group of stocks’ market caps resemble ZNGA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FFIV | 32 | 940064 | 3 |
| WYNN | 40 | 403164 | -4 |
| AAP | 38 | 839686 | -4 |
| AZPN | 20 | 736673 | -17 |
| Average | 32.5 | 729897 | -5.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $730 million. That figure was $1015 million in ZNGA’s case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand Aspen Technology, Inc. (NASDAQ:AZPN) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Zynga Inc (NASDAQ:ZNGA) 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 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on ZNGA as the stock returned 22.3% so far in Q2 (through May 22nd) 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.
Disclosure: None. This article was originally published at Insider Monkey.
