Hedge Funds Keep Buying Farfetch Limited (FTCH)

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Farfetch Limited (NYSE:FTCH).

Is Farfetch Limited (NYSE:FTCH) a marvelous investment right now? The smart money was betting on the stock. The number of long hedge fund bets moved up by 10 in recent months. Farfetch Limited (NYSE:FTCH) was in 57 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 47. 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 Q1 rankings).

In the financial world there are plenty of gauges stock traders can use to analyze stocks. A duo of the most innovative gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can beat their index-focused peers by a solid amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Gil Simon of SoMa Equity Partners

At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 look at the new hedge fund action regarding Farfetch Limited (NYSE:FTCH).

Do Hedge Funds Think FTCH Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 57 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FTCH over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Farfetch Limited (NYSE:FTCH) was held by Lone Pine Capital, which reported holding $725.4 million worth of stock at the end of December. It was followed by D E Shaw with a $274.7 million position. Other investors bullish on the company included Altimeter Capital Management, Tremblant Capital, and XN Exponent Advisors. In terms of the portfolio weights assigned to each position Voleon Capital allocated the biggest weight to Farfetch Limited (NYSE:FTCH), around 30.64% of its 13F portfolio. ROAM Global Management is also relatively very bullish on the stock, designating 16.21 percent of its 13F equity portfolio to FTCH.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Coatue Management, managed by Philippe Laffont, initiated the biggest position in Farfetch Limited (NYSE:FTCH). Coatue Management had $148.2 million invested in the company at the end of the quarter. Aaron Cowen’s Suvretta Capital Management also initiated a $70.8 million position during the quarter. The other funds with brand new FTCH positions are Gil Simon’s SoMa Equity Partners, Michael Kharitonov and Jon David McAuliffe’s Voleon Capital, and Benjamin A. Smith’s Laurion Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Farfetch Limited (NYSE:FTCH) but similarly valued. We will take a look at Citizens Financial Group Inc (NYSE:CFG), Ubiquiti Inc. (NYSE:UI), CGI Inc. (NYSE:GIB), MarketAxess Holdings Inc. (NASDAQ:MKTX), Coupa Software Incorporated (NASDAQ:COUP), Darden Restaurants, Inc. (NYSE:DRI), and Live Nation Entertainment, Inc. (NYSE:LYV). This group of stocks’ market values are closest to FTCH’s market value.

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As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1152 million. That figure was $3095 million in FTCH’s case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand CGI Inc. (NYSE:GIB) 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 17.2% in 2021 through June 11th and still beat the market by 3.3 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 -7% since the end of the first quarter (through 6/11) 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.

Disclosure: None. This article was originally published at Insider Monkey.